Bank of America Takes Giant Step in Resolving Mortgage Issues
Bank of America has entered into a $10.3 billion settlement with Fannie Mae to resolve repurchase issues involving nearly $300 billion in mortgages that B of A and Countrywide sold to the GSE from 2000 through 2008.
As part of the deal revealed Monday morning, B of A agreed to repurchase 30,000 loans for $6.75 billion and make a cash payment to Fannie for $3.55 billion.
The Charlotte, N.C.-based banking company also will pay Fannie $1.3 billion to address certain servicing issues.
Separately, B of A announced that it sold the servicing rights to 2 million loans to two counterparties, including 232,000 loans classified as 60 days or more past due.
“Together, these agreements are a significant step in resolving our remaining legacy mortgage issues, further streamlining and simplifying the company and reducing expenses over time,” said Bank of America chief executive Brian Moynihan.
Also on Monday, Walter Investment Management Corp. and NationStar reported that they acquired servicing portfolios from Bank of America.
About a year ago, B of A abruptly refused to honor repurchase requests by Fannie because the two parties couldn’t agree on the factors that should trigger a buyback.
“A favorable resolution of this long-standing dispute between Fannie Mae and Bank of America is in the best interest of taxpayers,” said Bradley Lerman, executive vice president and general counsel of Fannie Mae. “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.”
Separately, Bank of America revealed in a securities filing that it expects to take a $2.5 billion pretax loss in the fourth quarter due to another settlement involving independent foreclosure reviews required by federal regulators. A $10 billion settlement involving 14 banks (including B of A) is expected to be announced today.