BofA: Settlement of $9.33 billion reached in FHFA lawsuit

BofA settlement: Bank of America will settle with the Federal Housing Finance Agency for $9.33 billion in a lawsuit over its sales of mortgage securities to Fannie and Freddie in 2011. 

|
Mike Blake/Reuters/File
A Bank of America sign is pictured in Encinitas, California January 14.

Bank of America will spend $9.33 billion to resolve a dispute over mortgage securities with the Federal Housing Finance Agency, the regulator that oversees Fannie Mae and Freddie Mac.

The agency sued 18 financial institutions in 2011 over their sales of mortgage securities to Fannie and Freddie. It alleges many banks falsely represented the mortgage loans behind the securities. These soured after the housing bubble burst and lost billions in value.

Bank of America said that it will make cash payments of roughly $6.3 billion and also purchase securities from Fannie and Freddie worth more than $3 billion. It is one of several banks to settle with the FHFA, which announced the agreement Wednesday.

Fannie and Freddie don't directly make loans to borrowers. They buy mortgages from lenders, package them as bonds, guarantee them against default and sell them to investors. That helps make loans available and gives Fannie and Freddie a huge role in the housing market. They own or guarantee about half of all U.S. mortgages.

The two were rescued in a taxpayer bailout in 2008 as they sank under the weight of mortgage losses.

Separately, New York's attorney general announced that Bank of America and its former chief executive Kenneth Lewis reached a $25 million settlement to end an investigation into their actions in the 2008 acquisition of Merrill Lynch & Co.

The civil fraud lawsuit accused them of failing to disclose Merrill losses and bonuses before the deal closed. The settlement requires the bank pay $15 million and continue certain corporate governance reforms. Lewis, now 67, is prohibited for three years from serving as an officer or director of a public company. He was ordered to pay $10 million.

The bank acknowledged the settlement in a statement Wednesday, noting the $15 million reflects the attorney general's cost of investigation and litigation. Last year, Bank of America settled a related class-action shareholder lawsuit for $2.43 billion.

Attorney Bruce Yannett, representing Lewis, said his client relied on experienced legal counsel about disclosures. Yannett said Lewis is proud of his role helping the banking system survive a challenging period and he's pleased to put the case behind him.

Shares of Bank of America Corp. fell 3 cents to close at $17.18 and rose 15 cents in after-hours trading to reach $17.33.

You've read  of  free articles. Subscribe to continue.
Real news can be honest, hopeful, credible, constructive.
What is the Monitor difference? Tackling the tough headlines – with humanity. Listening to sources – with respect. Seeing the story that others are missing by reporting what so often gets overlooked: the values that connect us. That’s Monitor reporting – news that changes how you see the world.

Dear Reader,

About a year ago, I happened upon this statement about the Monitor in the Harvard Business Review – under the charming heading of “do things that don’t interest you”:

“Many things that end up” being meaningful, writes social scientist Joseph Grenny, “have come from conference workshops, articles, or online videos that began as a chore and ended with an insight. My work in Kenya, for example, was heavily influenced by a Christian Science Monitor article I had forced myself to read 10 years earlier. Sometimes, we call things ‘boring’ simply because they lie outside the box we are currently in.”

If you were to come up with a punchline to a joke about the Monitor, that would probably be it. We’re seen as being global, fair, insightful, and perhaps a bit too earnest. We’re the bran muffin of journalism.

But you know what? We change lives. And I’m going to argue that we change lives precisely because we force open that too-small box that most human beings think they live in.

The Monitor is a peculiar little publication that’s hard for the world to figure out. We’re run by a church, but we’re not only for church members and we’re not about converting people. We’re known as being fair even as the world becomes as polarized as at any time since the newspaper’s founding in 1908.

We have a mission beyond circulation, we want to bridge divides. We’re about kicking down the door of thought everywhere and saying, “You are bigger and more capable than you realize. And we can prove it.”

If you’re looking for bran muffin journalism, you can subscribe to the Monitor for $15. You’ll get the Monitor Weekly magazine, the Monitor Daily email, and unlimited access to CSMonitor.com.

QR Code to BofA: Settlement of $9.33 billion reached in FHFA lawsuit
Read this article in
https://www.csmonitor.com/Business/Latest-News-Wires/2014/0326/BofA-Settlement-of-9.33-billion-reached-in-FHFA-lawsuit
QR Code to Subscription page
Start your subscription today
https://www.csmonitor.com/subscribe