Posted Monday, Jan. 7, 2013, at 12:01 PM
Photo by John Adkisson/Getty Images.
Bank of America has settled with mortgage finance company Fannie Mae to the tune of $11.6 billion over home loans that went bad when the housing bubble burst. The bank also announced a $1.8 billion sale of collection rights on home loans as part of a “series of deals meant to help the bank move past its disastrous 2008 purchase of Countrywide Financial,” as Reuters puts it.
In related news, 10 of the country’s largest U.S. mortgage servicers, including Bank of America and Citigroup, agreed to pay a total of $8.5 billion in order to end case-by-case reviews of foreclosures, reports Bloomberg. The companies now have to provide $5.2 billion in mortgage assistance and $3.3 billion in direct payment to approximately 3.8 million borrowers who were foreclosed on from 2009-2010. The deal amounts to an acknowledgment that the individual reviews that came out of a 2011 deal “had proven too cumbersome and expensive,” notes Reuters.
Countrywide Financial has cost Bank of America more than $40 billion in losses, according to the New York Times. Fannie Mae and Freddie Mac have accused Countrywide of misrepresenting the loans it sold to them before the collapse of the housing market.
The Wall Street Journal has more details on the settlement:
The deal, announced Monday, includes a $3.55 billion cash payment and $6.75 billion repurchases of soured mortgage loans. In addition to the settlement, Bank of America will also pay $1.3 billion in fees to Fannie related to its role as a loan payment processor for the mortgage-finance giant.