The folks at Bank of America continue to feel the sting of all the bad mortgages they acquired when they adopted Countrywide in 2008. The bank has agreed to pay a total of over $2.8 billion to Fannie Mae and Freddie Mac to settle claims over questionable loans sold to the two government-sponsored enterprises.
Bank of America said it made a $1.28 billion cash payment to Freddie Mac as part of an agreement to end all claims through 2008 related to mortgages sold by Countrywide, a mortgage company bought by the bank in 2008.
The bank paid Fannie Mae $1.34 billion in cash and applied certain credits to reach an agreed $1.52 billion settlement on 12,045 Countrywide loans.
BofA Chief Financial Officer Charles Noski said this agreement only covers loans originated by Countrywide.
While this helps to clear a good chunk of claims against BofA, the bank still faces claims from other investors who purchased Countrywide mortgages.
“This doesn’t get the bank completely out of trouble. They’re still going to face litigation on repurchases from private-label investors,” one analyst tells Reuters.
Meanwhile, both Fannie and Freddie continue to pursue billions in repurchases from other banks and institutions. “While these agreements are an important step, the Enterprises (Fannie Mae and Freddie Mac) have other outstanding claims across a range of counterparties and they are being pursued,” said Edward DeMarco, acting director of the Federal Housing Finance Agency.