Bank of America 'Gift': $2.8B Settlement of Bad Mortgage Claims
Bank of America has agreed to pay Fannie Mae and Freddie Mac $2.8 billion to settle claims it sold mortgages that did not meet specifications.
The amount was lower than expected, according to Reuters and the Associated Press. Christopher Whalen, senior vice president for research firm Institutional Risk Analytics, called the deal “a gift to Bank of America,” according to the Reuters story.
The settlement covers mortgages sold to Fannie and Freddie by Countrywide Financial, acquired by Bank of America in 2008. The deal leaves open the possibility that Bank of America will be asked to repurchase faulty loans from Fannie Mae at a cost of up to $5.5 billion, according to an analyst who spoke to AP.
Meanwhile, Bank of America and four other mortgage servicers are talking about possible settlements with state attorneys general probing foreclosure practices, Bloomberg News reports.
Iowa Attorney General Tom Miller told Bloomberg that the five companies are discussing individual agreements and may be the first to settle with the states. Besides Bank of America, the mortgage servicers are JPMorgan Chase & Co., Citigroup Inc., Wells Fargo & Co. and Ally Financial Inc.
