Monday, January 7, 2013

Bank of America Agrees to $10 Billion Mortgage Mess Settlement

Posted By on Mon, Jan 7, 2013 at 8:58 AM

Bank of America announced early today that it would shell out more than $10 billion to settle claims with Fannie Mae over troubled mortgages that triggered the recession. Most of the bad loans were issued by Bank of America's subsidiary Countrywide Financial.

Today's settlement is expected to resolve outstanding disputes between B of A and Fannie Mae. The bank had previously settled its loan mess with Freddie Mac—the other U.S. government-owned mortgage giant—in 2011.

Fannie Mae and Freddie Mac said Countrywide had lied about the poor quality of its home loans that it sold to the government entitites.

Bank of America still has to answer to a 2012 lawsuit slapped by the U.S. Justice Department, accusing the bank of churning through loans so quickly that quality controls were virtually forgotten. A possible settlement could cost B of A more than $1 billion more. Bank of America was one of 14 banks accused of abuses in the federal suit.

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