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Bank of America Agrees to $9.5 Billion Settlement
Bank of America Corp. agreed to a $9.5 billion settlement over claims tied to faulty mortgages according to Bloomberg News. Bank of America Corp. will pay the $6.3 billion in cash to Fannie Mae and Freddie Mac to resolve lawsuits claiming the lender misrepresented loans packaged into bonds that were bought by the U.S.-owned mortgage firms. The company has also reported that it will buy back about $3.2 billion of mortgage bonds from the firms.
According to The Wall Street Journal, under the terms of the settlement, Bank of America will make about $6.3 billion in cash payments to Fannie Mae and Freddie Mac. Jonathan Finger, whose family-owned investment firm, Finger Interests Ltd., owns 900,000 Bank of America shares, said that according to Bloomberg News, “The financial crisis and its impact on Bank of America in particular were probably deeper than most investors expected.”
The settlement resolves all claims against Bank of America by the Federal Housing Finance Agency. Bank of America Corp. has also agreed to pay $15 million to settle claims that the former CEO Kenneth Lewis misled investors about its 2009 purchase of Merrill Lynch & Co. According to the L.A. Times, Merrill Lynch had been a major generator of bonds backed by high-risk mortgages.
Image credit: www.bloomberg.comBank of America Agrees to $9.5 Billion Settlement by Jaan