NEW YORK (TheStreet) -- Bank of America (BAC) is reportedly close to an agreement to pay $8.5 billion to settle claims from a group of investors that lost money on mortgage-backed securities purchased before the housing collapse.
The Wall Street Journal reported the bank was nearing the settlement late Tuesday, citing sources familiar with the matter. CNBC also reported the agreement was close.
Shares of Bank of America surged 3.3% to $11.18 in after-hours action, according to Nasdaq.com, with volume reaching close to 3.6 million.
A group of 22 investors that hold a collective $56 billion in mortgage-backed securities, including money manager Blackrock (BLK), MetLife (MET) and the New York Federal Reserve Bank have alleged that securities bought before the financial crisis from Countrywide Financial were composed of loans that did not meet sellers' promises about the quality of the borrowers or collateral.The investor group also claims Countrywide failed to maintain the right documentation while managing the loans. Bank of America's board, which still has to approve the settlement, met on Tuesday to discuss the deal, according to the WSJ report. --Written by Shanthi Bharatwaj in New York.
>To contact the writer of this article, click here: Shanthi Bharatwaj. >To follow the writer on Twitter, go to http://twitter.com/shavenk. >To submit a news tip, send an email to: email@example.com.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV