NEW YORK: Bank of America will pay $9.3 billion to settle US charges that it sold bad mortgage-backed securities to mortgage giants Freddie Mac and Fannie Mae ahead of the housing bust.
The settlement, arranged with the Federal Housing Finance Agency, which oversees Fannie and Freddie, involves securities sold by BofA as well as by Countrywide and Merrill Lynch, which were acquired by the bank.
The agreement covers four lawsuits alleging the BofA entities misled the two US mortgage giants about the quality of the underlying mortgages tied to $57.5 billion in securities sold to Freddie and Fannie.
"FHFA has acted under its statutory mandate to recover losses incurred by the companies and American taxpayers and has concluded that this resolution represents a reasonable and prudent settlement of these cases," said FHFA Director Melvin Watt.
US homeowners will also benefit from "increasing certainty" in the mortgage market due to the resolution of the cases, Watt said.
The bank meanwhile said the agreement resolves "one of the most significant remaining pieces" of litigation involving mortgage-backed securities still facing it.
BofA said it still faces a number of investigations by the Department of Justice, state attorneys general and other bodies on mortgage-related matters.
The bank said earnings in the first quarter will be hit by $3.7 billion due to the settlement.
Comments
Comments are closed.