Bank of America is reportedly close to settling with investors burned by securities backed by mortgages from Countrywide Financial, which BofA acquired in 2008. The investors, including the Federal Reserve Bank of New York and Blackrock Financial Management, have been twisting the bank’s arm to get it to buy back ill-advised loans that defaulted during the subprime mortgage crisis.
An anonymous source tells the AP that the deal could be announced as soon as today. The investors complain that Countrywide broke contracts with them by modifying bad loans and collecting servicing fees rather than foreclosing to protect the investments. Bank of America says it did not violate the agreements.
Bank of America nearing $8.5b investor settlement [AP via Boston.com]