Bank of America in $10B-plus mortgage settlement
CHARLOTTE, N.C. (AP) - Bank of America says it will spend more than $10 billion to settle mortgage claims resulting from the housing meltdown.
Under the deal announced Monday, the bank will pay $3.6 billion to Fannie Mae and buy back $6.75 billion in loans that the North Carolina-based bank and its Countrywide banking unit sold to the government agency from Jan. 1, 2000 through Dec. 31, 2008. That includes about 30,000 loans.
Its shares edged up 14 cents to $12.25 in premarket trading after the announcement.
CEO Brian Moynihan said the agreements were "a significant step" in resolving the bank's remaining legacy mortgage issues while streamlining the company and reducing future expenses.
Bank of America bought Countrywide Financial Corp. in July 2008, just before the financial crisis. Countrywide was a giant in mortgage lending, but was also known for approving risky loans.
Fannie Mae and Freddie Mac, which packaged loans into securities and sold them to investors, were effectively nationalized in 2008 when they nearly collapsed under the weight of their mortgage losses.
Bank of America's purchase of Countrywide originally was lauded by lawmakers because the bank was viewed as stepping in to eliminate a bad actor from the mortgage market. But instead of padding Bank of America's mortgage business, the purchase has drawn a drumbeat of regulatory fines, lawsuits and losses.
Bank of America said that the loans involved in the settlement have an aggregate original principal balance of about $1.4 trillion. The outstanding principal balance is about $300 billion.
"Fannie Mae has diligently pursued repurchases on loans that did not meet our standards at the time of origination, and we are pleased to have reached an appropriate agreement to collect on these repurchase requests," Bradley Lerman, Fannie Mae executive vice president and general counsel, said in a statement.
Bank of America Corp., which is based in Charlotte, N.C., also said that it is also selling mortgage servicing rights on about 2 million residential mortgage loans. The loans have an aggregate unpaid principal balance of approximately $306 billion.
The transferring of the servicing rights is expected to take place throughout the year.
In addition, the bank will pay $1.3 billion to Fannie Mae to settle loan servicing compensatory fee obligations.
Bank of America said its fourth-quarter will include various items related to the settlement and other matters, but that it expects "modestly positive" earnings for the period.
Under the deal announced Monday, the bank will pay $3.6 billion to Fannie Mae and buy back $6.75 billion in loans that the North Carolina-based bank and its Countrywide banking unit sold to the government agency from Jan. 1, 2000 through Dec. 31, 2008. That includes about 30,000 loans.
Its shares edged up 14 cents to $12.25 in premarket trading after the announcement.
CEO Brian Moynihan said the agreements were "a significant step" in resolving the bank's remaining legacy mortgage issues while streamlining the company and reducing future expenses.
Bank of America bought Countrywide Financial Corp. in July 2008, just before the financial crisis. Countrywide was a giant in mortgage lending, but was also known for approving risky loans.
Fannie Mae and Freddie Mac, which packaged loans into securities and sold them to investors, were effectively nationalized in 2008 when they nearly collapsed under the weight of their mortgage losses.
Bank of America's purchase of Countrywide originally was lauded by lawmakers because the bank was viewed as stepping in to eliminate a bad actor from the mortgage market. But instead of padding Bank of America's mortgage business, the purchase has drawn a drumbeat of regulatory fines, lawsuits and losses.
Bank of America said that the loans involved in the settlement have an aggregate original principal balance of about $1.4 trillion. The outstanding principal balance is about $300 billion.
"Fannie Mae has diligently pursued repurchases on loans that did not meet our standards at the time of origination, and we are pleased to have reached an appropriate agreement to collect on these repurchase requests," Bradley Lerman, Fannie Mae executive vice president and general counsel, said in a statement.
Bank of America Corp., which is based in Charlotte, N.C., also said that it is also selling mortgage servicing rights on about 2 million residential mortgage loans. The loans have an aggregate unpaid principal balance of approximately $306 billion.
The transferring of the servicing rights is expected to take place throughout the year.
In addition, the bank will pay $1.3 billion to Fannie Mae to settle loan servicing compensatory fee obligations.
Bank of America said its fourth-quarter will include various items related to the settlement and other matters, but that it expects "modestly positive" earnings for the period.
I always DON'T believe those Bankers deserve any BONUS !
Bank of America may be the most corrupt financial institution in the United States aside from Goldman Sachs. Just plain evil.
Many years ago;
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Feds: You're not making enough loans to poor people and minorities.
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Banks: We loan to people with decent credit scores, down payments and the means to pay the loans. Yes, there may have been some rare exceptions but for the most part, that's what we do.
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Feds: That's Effective Racism. Loan more to poor people and minorities who can't afford the houses or we will fine you billions of dollars
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Banks: Well, if you put it that way...sure, no problem.
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Years later...
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Feds: You gave mortgages to poor people and minorities that couldn't afford them, then sold the mortgages to us. That's predatory lending. Now we have to fine you billions of dollars.
 @Getov Mylon The banks are hardly innocent in all of this. Go look up the fractional reserve lending practices of the likes of Bank of America and JP Morgan, they were leveraging themselves 20 even 30 to 1. They were also illegally completing the chain of custody in mortgages that were being sold multiple times without the proper signatures.Â
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Yes, Congress had a big role in the housing meltdown, but the banks were just as much to blame.
 @Dredd57 Yes, banks are to blame as well. However, you can best believe that if these banks had to eat their own paper, they would have been a little more discerning in their loans.Â
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Which brings us back to, "Many years ago;..."
 @Dredd57 Exactly my point. There should be no bailouts. And the Feds should let the banks loan to whoever they want to. Keep the profits and eat the losses.
 @Getov Mylon Well, they received tons of what was essentially "free" bailout money. So whatever they have to shell out to consumers and people they screwed over, is probably just coming out of the national debt. LOL