BofA Inks $2 Billion Mortgage Settlement
Bank of America made a cash payment to Freddie Mac of $1.28 billion on Dec. 31, 2010.
The Fannie Mae agreement also substantially resolves the existing pipeline of repurchase and make-whole claims outstanding as of Sept. 20, 2010 that came from alleged breaches of selling reps and warranties related to Countrywide loans. Bank of America made a $1.34 billion cash payment to Fannie Mae, after applying certain credits to the agreed-upon amount of $1.52 billion, it said.
The Fannie Mae agreement comprises reps and warranties claims on 12,045 legacy Countrywide loans, with approximately $2.7 billion of unpaid principal balance. The agreement also resolves specific outstanding repurchase claims with on an additional 5,760 legacy Countrywide loans (approximately $1.3 billion of unpaid principal balance).
The agreements with Freddie Mac and Fannie Mae do not cover loan servicing obligations, other contractual obligations or loans contained in private label securitizations.
Bank of America's acquisition of Countrywide Financial during height of the financial crisis continues to be a headache for the banking institution. Bank of America has already discontinued Countrywide subprime, pay-option ARM and prime-quality two-year hybrid ARM loans. The company has also completed more than 750,000 loan modifications for distressed customers since the beginning of 2008, it said. Bank of America shares were rising 3.8% to $13.85 before the market opened. -- Written by Laurie Kulikowski in New York. To contact the writer of this article, click here: Laurie Kulikowski. To submit a news tip, send an email to: tips@thestreet.com.Select the service that is right for you!
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