Britton Law, P.A.
It’s business and it’s personal call: 910-401-3356 ~or~ 888-811-9738 Representing the injured and local businesses since 1992

Bank of America settles Fannie Mae mortgage lawsuit for $11.6B

North Carolina-based lender Bank of America moved a step closer to putting commercial litigation over mortgages issued by a subsidiary when it reached a settlement with Fannie Mae on Jan. 7. The bank will spend a total of $11.6 billion in payments to the government mortgage agency and buybacks of mortgages.

The mortgages at the heart of the dispute were issued by Countrywide in the years before Bank of America purchased it in July 2008. The mortgages, many of which were leant to borrowers with questionable finances, were later sold to Fannie Mae, where they went into foreclosure, helping to trigger the housing bubble bursting that helped trigger the 2008 recession.

The mortgages were also divided up into mortgage-backed securities and packaged for investors, who lost money when the mortgages went into foreclosure. Investors have complained that Countrywide misled them on information provided regarding the values of the homes or the income of the buyers.

As part of the settlement, BoA will pay $4.9 billion in cash, including $1.3 in penalties for allegedly failing to react to the foreclosure crisis quickly enough. The bank will also buy back $6.75 billion worth of mortgages that either it or Countrywide sold to Fannie Mae from January 2000 through the end of 2008.

Though the price tag on the settlement is fairly high, the bank appears to be satisfied to put the litigation behind it. BoA's CEO called it "a significant step." The bank may be able to reduce the amount of funds it has set aside to deal with litigation over mortgage-backed securities.

Source: Boston Globe, "Bank of America settles with Fannie Mae," Steve Rothwell, Jan. 8, 2013

No Comments

Leave a comment
Comment Information
  • Super-Lawyers
  • AV - Peer Review Rated
  • The American Trial Lawyers Association - Top 100 Trial Lawyers
Send us an Email. We’ll Listen.

Bold labels are required.

Contact Information
disclaimer.

The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.

close

Privacy Policy

News & Media