CHARLOTTE, N.C. - Bank of America Corp. on Monday said it will pay Freddie Mac $404 million to settle remaining claims over soured home loans the bank sold to the mortgage giant, marking the bank's latest attempt to put its mortgage woes behind it.
CHARLOTTE, N.C. — Bank of America Corp. on Monday said it will pay Freddie Mac $404 million to settle remaining claims over soured home loans the bank sold to the mortgage giant, marking the bank’s latest attempt to put its mortgage woes behind it.
The Charlotte-based bank said the agreement resolves all requests to buy back defective mortgages sold to Freddie from Jan. 1, 2000, to Dec. 31, 2009. Bank of America said the cost of the settlement is covered by the bank’s existing reserves.
It’s the latest settlement Bank of America has reached with government-controlled Freddie, which like its sister institution, Fannie Mae, buys home loans from lenders and packages them into mortgage-backed securities. In the aftermath of the housing crash, Fannie and Freddie, which were taken over by the U.S. government in 2008, have asked banks to buy back or reimburse losses related to mortgages that went bad or did not meet agreed-upon requirements.
Bank of America has reached a previous agreement with Freddie over loans sold by Countrywide Financial Corp. through 2008 and forged two settlements with Fannie over Countrywide and Bank of America loans sold through 2008. Bank of America acquired Countrywide in 2008.
At the end of September, Bank of America had $1.4 billion in outstanding mortgage repurchase requests from Freddie, the most of any bank, according to Freddie’s quarterly securities filing in November.
The latest agreement does not cover loan servicing obligations, loans packaged into bonds by other securitizers and disclosure-related claims, the bank said. The Wall Street Journal reported last month that Bank of America was in talks to reach a settlement with Freddie.
©2013 The Charlotte Observer (Charlotte, N.C.)
Visit The Charlotte Observer (Charlotte, N.C.) at www.charlotteobserver.com
Distributed by MCT Information Services