CHARLOTTE, N.C.
(AP) -- Bank of America says it will spend more than $10 billion to
settle mortgage claims resulting from the housing meltdown.
Under
the deal announced Monday, the bank will pay $3.6 billion to Fannie Mae
and buy back $6.75 billion in loans that the North Carolina-based bank
and its Countrywide banking unit sold to the government agency from Jan.
1, 2000 through Dec. 31, 2008. That includes about 30,000 loans.
Its shares briefly edged up 9 cents to $12.20 in morning trading, its highest level since May 2011.
CEO
Brian Moynihan said the agreements were "a significant step" in
resolving the bank's remaining legacy mortgage issues while streamlining
the company and reducing future expenses.
Bank
of America bought Countrywide Financial Corp. in July 2008, just before
the financial crisis. Countrywide was a giant in mortgage lending, but
was also known for approving risky loans.
Fannie
Mae and Freddie Mac, which packaged loans into securities and sold them
to investors, were effectively nationalized in 2008 when they nearly
collapsed under the weight of their mortgage losses.
Bank
of America's purchase of Countrywide originally was lauded by lawmakers
because the bank was viewed as stepping in to eliminate a bad actor
from the mortgage market. But instead of padding Bank of America's
mortgage business, the purchase has drawn a drumbeat of regulatory
fines, lawsuits and losses.
Bank of America
said that the loans involved in the settlement have an aggregate
original principal balance of about $1.4 trillion. The outstanding
principal balance is about $300 billion.
"Fannie
Mae has diligently pursued repurchases on loans that did not meet our
standards at the time of origination, and we are pleased to have reached
an appropriate agreement to collect on these repurchase requests,"
Bradley Lerman, Fannie Mae executive vice president and general counsel,
said in a statement.
Bank of America Corp.,
which is based in Charlotte, N.C., also said that it is also selling
mortgage servicing rights on about 2 million residential mortgage loans.
The loans have an aggregate unpaid principal balance of approximately
$306 billion.
The transferring of the servicing rights is expected to take place throughout the year.
In addition, the bank will pay $1.3 billion to Fannie Mae to settle loan servicing compensatory fee obligations.
Bank
of America said its fourth-quarter will include various items related
to the settlement and other matters, but that it expects "modestly
positive" earnings for the period.
Copyright 2012 by The Associated Press. All rights reserved.
