Bank of America to pay Freddie Mac $404 million in mortgage settlement

Mon Dec 2, 2013 9:04am EST
 
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By Jonathan Stempel and Tanya Agrawal

(Reuters) - Bank of America Corp will pay $404 million to Freddie Mac to resolve all repurchase liabilities on home loans sold to the government-controlled mortgage company from 2000 to 2009, the bank said on Monday.

The settlement covers about 716,000 loans and compensates Freddie Mac for past losses and potential future losses related to denials, rescissions and cancellations of mortgage insurance, Freddie Mac said in a statement.

Bank of America will pay a net $391 million, reflecting a $13 million credit for prior repurchases and adjustments, Freddie Mac said.

Since 2010, Bank of America has agreed to pay more than $45 billion to settle various claims stemming from the U.S. housing and financial crisis.

The Charlotte, North Carolina-based bank bought mortgage lender Countrywide Financial Corp in July 2008 and Wall Street bank Merrill Lynch six months later.

Previously, Bank of America agreed with Freddie Mac to resolve representations and warranties claims related to loans that Countrywide sold to Freddie Mac through 2008.

In January, the bank agreed to pay $3.6 billion to Fannie Mae, another government-controlled mortgage company, to resolve repurchase claims over Countrywide and Bank of America loans from 2000 to 2008.

The latest payment is covered by existing reserves, Bank of America said.   Continued...

 
The logo of the Bank of America is pictured atop the Bank of America building in downtown Los Angeles November 17, 2011. REUTERS/Fred Prouser