Bank of America to Pay $10.3 Billion Over Questionable Mortgages
- January 14, 2013
- The Frankowski Firm
A recent CNN Money article disclosed a $10.3 billion settlement between Fannie Mae and Bank of America over questionable home loans sold during the housing bubble and subsequent burst. The article stated the large settlement would be comprised of a direct payment of $3.55 billion in cash as well as $6.75 billion paid to repurchase around 30,000 “questionable” mortgages. These mortgages were combined into mortgage backed securities, which were purchased and guaranteed by Fannie Mae and turned out to be very risky and unstable investments. It was these mortgage backed securities that helped bring down the government backed mortgagor, causing them massive losses and needing a $116 billion bailout to continue to operate. According to the CNN Money article, the loans in question were originally made by Countrywide Financial between 2000 and 2008 and the original value of the loans covered in this settlement was $1.4 trillion. Bank of America purchased Countrywide in 2008 for $4 billion. This is not the first settlement that BofA has reached regarding Countrywide’s mortgage or loan practices and their packaging of mortgage backed securities. BofA repurchased $2.87 billion in bad loans purchased by Fannie Mae and Freddie Mac. In 2011, BofA agred to pay a $335 million fine over Countrywide’s alleged discriminatory lending practices. The settlement between Fannie Mae and BofA was disclosed the same day that the Federal Reserve and Office of the Comptroller of the Currency reached a different agreement with BofA and nine other banks for a total of $8.5 billion regarding foreclosure abuse. The other banks in the foreclosure abuse settlement are Aurora, Citigroup, JPMorgan Chase, MetLife, PNC, SunTrust, US Bank, Wells Fargo and Sovereign Bank. If you or someone you know has lost money as a result of an investment in mortgage backed securities, please contact Richard Frankowski at 205-747-1903 to discuss your potential legal remedies.