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Bank of America settles $9.5 billion lawsuit with FHFA


by Joseph Earnest  March 27, 2014


Newscast Media WASHINGTON—Embattled Bank of America has reached a settlement with the Federal Housing Finance Agency (FHFA) in a lawsuit that was filed against the bank for its fraudulent mortgage-backed securities that led to the housing crisis.

Under terms of the deal, BofA agreed to make cash payments of about $6.3 billion to Fannie Mae and Freddie Mac as well as to purchase certain Residential Morgage-Backed Securities (RMBS) at fair market value, or about $3.2 billion.

In return, the FHFA agreed to dismiss pending lawsuits and release BofA and its affiliates from all securities law and fraud claims.

Charlotte-based BofA said the settlement is expected to cut its first-quarter pretax income by about $3.7 billion, or 21 cents per share after taxes.

"FHFA has acted under its statutory mandate to recover losses incurred by the companies and American taxpayers and has concluded that this resolution represents a reasonable and prudent settlement of these cases," FHFA Director Melvin Watt said in a statement.

However BoA's problems are not yet over since the Securities and Exchange Commission filed a separate lawsuit last year, citing violation of SEC rules by the bank. (pop-up)

In addition, despite having signed a consent agreement with the Department of Justice on April 4, 2012 when BoA together with 16 other banks were sued for defrauding property owners, the DOJ filed yet another lawsuit last year, this time against the bank for defrauding investors. (pop-up)

The firm said that it has now resolved around 88% of the total cost of pending litigation relating to the bank's conduct during the housing crisis. Add Comments>>













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