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BofA to Pay $3.6 billion to Fannie Mae to Settle Mortgage Claims

07 Jan 2013

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Bank of America

(Reuters)

Bank of America Corp (BAC.N) said it will pay $3.6 billion (£2.24 billion) to Fannie Mae (FNMA.OB) to settle claims related to residential mortgage loans for the nine years to the end of 2008.

The bank also entered into agreements with Nationstar Mortgage Holdings LLC (NSM.N) and Walter Investment Management Corp WAC.N to sell about $306 billion of residential mortgage servicing rights, reports Reuters.

The rights allow banks to earn fees from mortgage investors in exchange for collecting home loan payments from borrowers.
As part of the settlement with Fannie Mae, the bank will repurchase $6.75 billion of residential mortgage loans sold to the government agency.

BofA said the settlement will reduce its fourth-quarter pretax income by about $2.7 billion.
Reuters reported on Friday that the bank was in talks to sell collection rights on $300 billion of mortgages to lessen its exposure to huge losses from its acquisition of Countrywide Financial Corp in 2008.

"Together, these agreements are a significant step in resolving our remaining legacy mortgage issues, further streamlining and simplifying the company and reducing expenses over time," Chief Executive Brian Moynihan said in a statement.

Tags: Business, World, Mortgage Claims

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