Bank of America Gets Away with Paying $10.3 Billion to Settle Foreclosure Fraud Case with Fannie Mae
Bank of America has agreed to pay Fannie Mae more than $10 billion to resolve claims over bad mortgages that helped cripple the government-sponsored enterprise during the housing crash.
Under the terms of the agreement, BofA will pay $3.6 billion directly to Fannie Mae, and spend another $6.75 billion to buy back mortgages from the housing finance giant. Most of the bad mortgages were issued by the bank’s Countrywide Financial subsidiary.
BofA also agreed in a separate legal case to pay an undisclosed sum as part of a $8.5 billion settlement reached between federal regulators and several large banks, including JPMorgan Chase and Citibank.
This second agreement resolves claims of foreclosure abuses that included flawed paperwork used in foreclosures and poorly managed loan modifications by 10 major lenders.
Of the $8.5 billion, about $3.3 billion will go to Americans who went through foreclosure in 2009 and 2010, while $5.2 billion will cover other assistance to borrowers, including loan modifications and reductions of principal balances. Homeowners could get up to $125,000 in compensation.
“The two agreements are not directly related, but they illustrate the extent of the banks’ role in the excesses of the credit boom, from the making of loans to the seizure of homes,” wrote The New York Times.
Bank of America officials assured their investors that the entire sum of the BofA payouts will be covered by reserves and 2012 fourth quarter set-asides.
To Learn More:
In Deal, Bank of America Extends Retreat From Mortgages (by Jessica Silver-Greenberg and Peter Eavis, New York Times)
Big Banks Settle Mortgage Hangover (by Shayndi Raice, Nick Timiraos and Dan Fitzpatrick, Wall Street Journal)
U.S. Mortgage Firms Said to Near $10 Billion Settlement (by Cheyenne Hopkins and Clea Benson, Bloomberg)
Bank of America Provided Pre-Answered Questions by Independent Foreclosure Reviewers (by Noel Brinkerhoff, AllGov)
U.S. Finally Sues Bank of America for Mortgage Fraud (by Noel Brinkerhoff and David Wallechinsky, AllGov)
Bank of America Smacked with Foreclosure Fraud Lawsuits (by Matt Bewig, AllGov)
Loophole in Mortgage Fraud Settlement Could Give Billions to Biggest Banks (by David Wallechinsky, AllGov)
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