The Federal Housing Finance agency (FHFA) announced it reached an agreement with Bank of America Corporation (BofA), Charlotte, North Carolina, that provides for an aggregate payment of roughly $9.3 billion. [paragraph] Bank of America said that the FHFA settlement resolves four lawsuits that the agency filed against Bank of America, Countrywide and Merrill Lynch entities beginning in September 2011. [paragraph] FHFA alleged in the suits that the companies falsely represented that the underlying mortgage loans complied with certain standards. BofA said that roughly $57.5 billion (original purchase cost) of private-label mortgage securities bought by Fannie Mae and Freddie Mac were covered by the settlement.
FHFA said the cases involve purchases of private-label residential mortgage-backed securities (RMBS) purchased by Fannie and Freddie between 2005 and 2007.
Under the terms of the agreement, Bank of America said it will make cash payments totaling roughly $6.3 billion to Fannie Mae and Freddie Mac. The bank will also purchase certain residential mortgage-backed securities at fair market value (roughly $3.2 billion).
In a press release issued by the bank, the company said, "In return, FHFA's pending lawsuits will be dismissed with prejudice and Bank of America and its affiliates will be released from all securities laws and fraud claims, as well as certain other claims related to the private-label RMBS in dispute."
Fannie Mae announced that under the terms of the agreement, Bank of America will make a cash payment of roughly $4.4 billion to Fannie Mae to resolve legal claims and to purchase private-label securities.
Fannie Mae General Counsel and Executive Vice President Bradley Lerman said, "This is a fair and appropriate resolution, and we're pleased to move forward with this matter in the rear-view mirror."
Freddie Mac said that under the terms of the settlement, it will receive a total of approximately $5.1 billion from Bank of...