Bank Of America Agrees To Pay $9.3 Billion To Settle Mortgage Bond Claims

  on March 26 2014 6:53 PM

 

The Federal Housing Finance Agency announced Wednesday a settlement with Bank of America for about $9.33 billion.

Bank of America will pay the amount to Fannie Mae and Freddie Mac to settle claims that it sold them faulty mortgage-backed securities during the housing bubble, a U.S. regulator said on Wednesday, according to Reuters.

It's the 10th settlement the FHFA has reached in litigation that started in 2011 when it filed 18 lawsuits over about $200 billion in mortgage-backed securities, an investment product that's been at the heat of the recent global financial crisis, Reuters reported.    

Many of the settlements came after court rulings that went against the banks.  The FHFA has recovered more than $10 billion from banks by asserting similar claims over mortgage securities, the news agency noted.              

The deal will put an end to litigation over the bad mortgages issued that preceded the financial crisis, Bloomberg reported.

In a statement, FHFA Director Melvin Watt, said the settlement is "an important step in helping restore stability to our broader mortgage market and moving to bring back the role of private firms in providing mortgage credit."

The federal agency continues to have claims in seven suits related to residential mortgage-backed securities, according to CNBC.

"This is a fair and appropriate resolution, and we're pleased to move forward with this matter in the rear-view mirror," said Bradley Lerman, executive vice president and general counsel for Fannie Mae. "Fannie Mae remains focused on helping people to buy a house, rent an apartment or avoid foreclosure as we build a stronger housing finance system for the future." 

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