The settlement covers residential mortgage loans originated and sold directly to Fannie Mae from January 1, 2000, through December 31, 2008, the big US bank said in a statement.

Under the agreements, Bank of America will pay $3.55 billion in cash to the government-controlled Federal National Mortgage Association (Fannie Mae) and repurchase for $6.75 billion some residential mortgage loans sold to Fannie Mae.

In addition, Bank of America will pay $1.3 billion to address servicing issues, Fannie Mae said in a separate statement.