The announcement of the settlement was included in BofA’s quarterly earning statement. The $500 million will be paid to the Maine State Retirement System and other pension funds who allege they were provided bad information about the quality of the loan bundles they were investing in.
This has been the common theme in lawsuits against BofA and Countrywide. During the years leading up to the burst of the housing bubble, Countrywide became increasingly carefree about who it would lend money to, removing many of the standard checks and roadblocks in the underwriting process in order to package up and re-sell these loans to investors.
The bank recently settled with the National Credit Union Administration, an independent federal regulator that charters and supervises credit unions, for $167 million. The NCUA had claimed that Countrywide misled a handful of large wholesale credit unions into buying mortgage-backed securities that might as well have coated with polonium they were so toxic. The credit unions subsequently took huge losses and closed, so the NCUA sued to recoup those losses.
In all, the bar tab for BofA’s dalliance with Countrywide, along with its acquisition of a bottomed-out Merrill Lynch, is well past the $40 billion mark.