Bank of America to Pay $10B in Mortgage Settlement

by Christopher Freeburn | January 7, 2013 12:23 pm

Bank of America to Pay $10B in Mortgage Settlement

bank of america gold angelic 630 300x200 Bank of America to Pay $10B in Mortgage Settlement[1]Bank of America (NYSE:BAC[2]) has reached a settlement[3] with the Fannie Mae (PINK:FNMA[4]) over bad mortgages.

Under its terms, BofA will repurchase $6.75 billion in distressed mortgages sold by Countrywide Financial to Fannie Mae between 2000 and 2008. The bank will also pay $3.6 billion in cash to Fannie Mae, the Los Angeles Times noted.

During the financial crisis, Fannie Mae and its compliment, Freddy Mac (PINK:FMCC[5]),  needed U.S. government bailouts after losing billions of dollars on failed mortgage loans.

Federal regulators accused BofA, along with a number of other banks, of selling mortgages that had been issued to poorly qualified borrowers, which increased their default rates. Bank of America purchased Countrywide Financial  in 2008.

Shares of BofA fell fractionally in Monday midday trading.

Endnotes:
  1. [Image]: http://investorplace.com/wp-content/uploads/2011/11/bank-of-america-gold-angelic-630.jpg
  2. BAC: http://studio-5.financialcontent.com/investplace/quote?Symbol=BAC
  3. has reached a settlement: http://www.latimes.com/business/money/la-fi-mo-bank-of-america-fannie-mae-settlement-countrywide-20130107,0,7115120.story
  4. FNMA: http://studio-5.financialcontent.com/investplace/quote?Symbol=FNMA
  5. FMCC: http://studio-5.financialcontent.com/investplace/quote?Symbol=FMCC

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