Bloomberg News

BofA to Pay Fannie Mae $3.6 Billion in Mortgage Deal

January 07, 2013

BofA Agrees to Pay Fannie Mae $3.6 Billion in Mortgage Deal

Bank of America Corp. will also repurchase $6.75 billion of residential mortgages sold to Fannie Mae, the lender said today in a statement distributed by Business Wire. Photographer: Victor J. Blue/Bloomberg

Bank of America Corp. (BAC:US), the second- biggest U.S. lender by assets, agreed to pay Fannie Mae $3.6 billion to resolve home-loan repurchase claims.

The lender will also pay $6.75 billion to repurchase residential mortgages sold to Fannie Mae, Charlotte, North Carolina-based Bank of America said today in a statement. The deal will “substantially resolve outstanding claims for compensatory fees” between the two companies, according to the statement.

Fannie Mae, Freddie Mac and other buyers of mortgages have demanded compensation for loans created by Countrywide Financial Corp., which Bank of America acquired in 2008, claiming the loans were based on flawed data about the properties and borrowers. Losses from Countrywide, the largest U.S. mortgage lender as recently as 2007 before billions of dollars in soured loans prompted its sale to Bank of America, have continued to plague the lender, leading to more than $40 billion in costs.

“These agreements are a significant step in resolving our remaining legacy mortgage issues, further streamlining and simplifying the company and reducing expenses over time,” Bank of America Chief Executive Officer Brian Moynihan, 53, said in the statement.

Today’s agreement covers $300 billion in outstanding principal on loans sold to Fannie Mae between 2000 and 2008. The lender also agreed to sell servicing rights on $306 billion in home loans in separate deals.

Bank of America shares advanced 2.1 percent to $12.36 at 7:57 a.m. in New York.

Nationstar Mortgage Holdings Inc. (NSM:US) said in a separate statement that it signed an agreement to acquire $215 billion in residential mortgage servicing rights from Bank of America for about $1.3 billion.

To contact the reporter on this story: Zachary Tracer in New York at ztracer1@bloomberg.net

To contact the editor responsible for this story: David Scheer at dscheer@bloomberg.net


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Companies Mentioned

  • BAC
    (Bank of America Corp)
    • $17.98 USD
    • 0.00
    • 0.0%
  • NSM
    (Nationstar Mortgage Holdings Inc)
    • $28.47 USD
    • -0.30
    • -1.05%
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