Bank of America Corp. has begun potential settlement discussions with large institutional investors who bought MBS that later underperformed, causing losses at these entities,
The newspaper, citing sources "familiar with the situation" identified the MBS investors as the Federal Reserve Bank of New York, Freddie Mac, Blackrock Inc., and PIMCO.
The investors also apparently are talking with Bank of New York.
In October these investors began exploring the possibility of suing B of A over what they allege is the poor quality of "master servicing" on the MBS done by Countrywide Financial Corp. B of A bought CFC in August 2008, inheriting all its troubled "legacy assets" and related issues.
These investors want the bank to repurchase troubled bonds, a move that could have cost B of A billions of dollars. (CFC was a top-ranked issuer of nonprime MBS during the housing boom.)
Initially, B of A CEO Brian Moynihan vowed to fight these investor repurchase claims regarding flawed mortgages, but it appears the bank's position is loosening.
Late Wednesday, a spokesman for B of A had not returned a telephone call about the matter. Kathy Patrick, an attorney representing the investors, told National Mortgage News late Wednesday that while she could not characterize the nature of the talks, "We're pleased that we've opened a constructive dialogue with Bank of America, and Bank of New York." (She did not mention the other investors mentioned in the WSJ story.)
