Bank of America to pay $9.3 billion to settle mortgage bond claims

The author has posted comments on this articleReuters | Mar 27, 2014, 04.11AM IST

WASHINGTON: Bank of America will pay $9.3 billion to Fannie Mae and Freddie Mac to settle claims that it sold them faulty mortgage-backed securities during the housing bubble, a US regulator said on Wednesday.

The settlement resolves claims filed by the Federal Housing Finance Agency (FHFA), since 2008 the conservator of Fannie and Freddie for the government-controlled mortgage companies.

It was the 10th settlement that the FHFA has reached in litigation that began in 2011 when it filed 18 lawsuits over about $200 billion in mortgage-backed securities, an investment product at the center of the recent global financial crisis.

Many of the settlements were reached after a series of court rulings that went against the banks.

So far, the FHFA has recovered more than $10 billion from banks by asserting similar claims over mortgage securities.

Bank of America said in a statement that the FHFA settlement is expected to reduce first-quarter income by approximately $3.7 billion.

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