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Saturday, August 6, 2011

B of A Forced to Buy Back More Toxic Mortgages

Posted By on Sat, Aug 6, 2011 at 10:40 AM

Bank of America, the nation's largest lender, warned late Friday that its cash flows could be jeopardized by buying back toxic mortgages from Fannie Mae and Freddie Mac. B of A had originally agreed in January to repurchase bad loans it had sold to Fannie and Freddie, but the two government-sonsored companies announced this week that they would send back many more faulty loans than the bank had anticipated.

The "ultimate resolution" said the bank in a statement, "could have a material adverse effect on our cash flows, financial condition and results of operations."

Bank of America stock was clobbered through much of the past week and is now down by nearly 40 percent for the year. The last time the bank traded at its current level was in April 2009.

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