Bank Of America Reaches $8.5 Billion Settlement On Mortgage-Securities Claims [UPDATE]

UPDATE: Bank of America Corp settled nearly all of the claims related to the legacy Countrywide-issued first-lien residential mortgage-backed securitization (RMBS) repurchase exposure for $8.5 billion in cash.

The largest U.S. bank by assets said it intends to record an additional $5.5 billion provision to its representations and warranties liability for both Government-Sponsored Enterprises (GSE) and non-GSE exposures in the second quarter of 2011.

On Tuesday Reuters reported that Bank of America was close to a settlement agreement with a group of powerful group of investors that lost money on mortgage-backed securities.

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Bank of America Corp is close to a deal to pay $8.5 billion to settle claims from investors that lost money on mortgage-backed securities, the Wall Street Journal reported on Tuesday, citing people familiar with the matter.

The settlement, first reported by the Wall Street Journal, would be the largest such sum in the banking industry to date. The deal would have to be approved by the bank's board, which met on Tuesday to discuss it, according to the source.

The largest U.S. bank by assets has been fighting claims by a group of 22 investors over the housing-related securities it packaged and sold before the financial crisis. The investor group includes BlackRock Inc, MetLife Inc and the Federal Reserve Bank of New York.

The source said the settlement extends beyond the case brought by the initial group of investors and could resolve "significant parts" of the bank's exposure to repurchase claims from private investors.

Bank of America was not immediately available for comment on Tuesday.

BlackRock declined to comment.

Bank of America's shares rose about 3.5 percent in after-hours trade on Tuesday after news of the settlement deal was first reported.

(Reporting by Maria Aspan in New York and Joe Rauch in Charlotte; Editing by Carol Bishopric and Tim Dobbyn)

Copyright 2011 Thomson Reuters. Click for Restrictions.

Bank of America Settles Case Over Mortgage-Backed Securities

Comments

[legaleagle007]

11:51 AM on 07/06/2011

like Godfather Don Correlone said
"A man with a briefcase can do more damage than a man with a gun" The Don was on target.... Now we will soon see that Mr. Madoff has some company in his plush facility.

[Whitemellon]

05:20 AM on 07/02/2011

Geez, they get fined billions and their stock price goes up. Seems like the investors think the bank got off easy and the bankers being very good scammers will be doing lucrative deals in the near future. After all no one at the bank went to jail so they are their to continue scheming.

[lovecindy1]

03:01 PM on 06/30/2011

Does the SEC and other govt agenecies care about investors" Nope. Take a look at these videos> Amazing.

http://www.youtube.com/watch?v=c-V5wIV62qU

http://www.youtube.com/watch?v=_8QBtg6-c4M

http://www.youtube.com/watch?v=Rrf5yG_4y5w&feature=related

[JohnBryansFontaine]

08:30 AM on 06/30/2011

LABOR UNIONS DID NOT CAUSE THE MORTGAGE MELTDOWN, BANKS AND WALL STREET DID

[tlcpro]

10:12 AM on 06/30/2011

Got that right!

[JohnBryansFontaine]

08:26 AM on 06/30/2011

What happens when you stop paying your mortgage?
By Jim Axelrod

http://www.cbsnews.com/stories/2011/06/29/eveningnews/main20075524.shtml

[tlcpro]

10:25 AM on 06/30/2011

Thanx for sharing that video. I haven't paid the mortgage on the house I am trying to sell, for a year now. I keep hearing that I am being foreclosed on, but the county clerk hasn't been notified, and I have not been served. So, who knows what is going to happen. I figure if someone, God knows who, takes the house, I've just paid $95,000 in rent over the last 10 years. I have a roof over my head. Never mind the fact that we made tens of thousands of dollars worth of improvements since we bought the place. I guess we can say that we got our money's worth and so did the bank, if they take it back. I don't think they have the paperwork to back up a foreclosure. The note originator is defunct and the VP is in prison for mortgage fraud. The note was supposedly packaged and sold at some point. I was never notified. I was not even told that the company had filed for bankruptcy. I had to do the investigating myself.

[JohnBryansFontaine]

02:02 PM on 06/30/2011

You're welcome, tlcpro!

The more foreclosed-on people who find out about this, the more who will get to keep their homes.

[joeThibo]

07:38 AM on 06/30/2011

Another saved bank by the government you gotta love the Fed they sure know how to spend the people's money!! We're broke and in debt for what reason ??

[Siebenstein]

06:29 AM on 06/30/2011

J.P. M Chase anyone?

[DismayedRepub]

10:01 PM on 06/29/2011

Wish I could settle my liabilities for pennies on the dollar. Such a deal for them.

[bcinu2]

10:00 PM on 06/29/2011

The government is not going to ever side on the ordinary citizens. Tear it down and rebell. We need to take back the people's wealth and stop the economy that does nothing for the people beyond a few crumbs that get thrown to the masses.

Those homeless should demonstrate by occupying the vacant properties. Whenever they bailiffs come out to do the criminals bidding to force evictions people should turn out in the streets in mass to stop them and not allow forced evictions to proceed. Burn down the Banks and the lenders. They will not stop screwing the people themselves. It is up to all True Americans to bring this era of the killing off of the middle classes to an end. We need to throw off the shackles being placed on all Americans with a net worth under $50,000 dollars. Take back the country and push the economy over the edge. Free the people from the prisons who are there over a stupid drug crime that was non violent.

Enough is enough......bc

[bcinu2]

09:21 PM on 06/29/2011

A few weeks ago, I wrote that the Attorney Generals were going to make settlements that would bypass the very folks who got screwed. Now fairly quick they will begin settling with all the other fat cats and the transfers of wealth will be about complete.

A revolution is needed. People all marching in the streets. The common mans unions are all being gutted. The Banking crisis has done in Joe and Jill average. This is a bank who makes half of that settlement in a quarter.

Sure is not going to be any justice for Main street America. The people get screwed again. It will not stop until people stop those responsible. The transfer of wealth is now an accomplishment as soon as the fines are paid.....makes me sick..........bc

[IamGerry]

08:10 PM on 06/29/2011

Is anyone going to the graybar college? That would be fitting in this instance. Money doesn't mean anything to them - they just collect it from their customers in the form of higher fees, late charges, increased interest, etc. A real punishment would be prison and they deserve it.

[Kvetguy]

07:17 PM on 06/29/2011

THAT'S EASY FOR THE CROOKS
WE THE CUSTOMER WILL PAY & THE BIG GUYS WILL ENJOY THEIR BONUSES
WHILE THE PEOPLE JECTED WIL,NOT SEE A DIME
WELCOME TO AMERICA!!!!
THE LAND OF OPPORTUNITIES

[chance1946]

04:30 PM on 06/29/2011

I have been watching MSNBC and they don't get it. They think since we cut over here that we can spend over here. A friend of mine came over a few minutes ago and he was talking about the Euro falling failing. I swear we know more, that some of he goof balls on tv. They are insulting our intelligence.


a good source of info I use all the time is zfacts.com found it by accident.

[An Independent Woman]

04:12 PM on 06/29/2011

TWENTY-TWO investors (22!) will be getting 8.5 BILLION dollars because BofA sold them mortgage backed securities they knew were bad.... but does this settlement address the SYSTEMIC culture of doing anything for money that our banks and other financial institutions are wallowing in? No. The Dodd-Frank legislation is a joke, with Dodd and Frank laughing the loudest. I am ashamed of my country and the financial institutions that are running it.

[dldesir3030]

05:07 PM on 06/29/2011

YOU GO GIRL!!!

KILL THE FEDERAL RESERVE!!

[John Shaw]

03:05 PM on 06/29/2011

Forgive me for being naive, but why don't we just prosecute the bank for knowingly hiding the true riskiness of the mortgage-backed securities held. If the Fed and other investors shored up their liquidity based on the full faith that these securities were truly marketable, then should they be indicted on fraud after discovering that these securities were misrepresented all along?

I just don't understand why companies get to settle and negotiate when people go to prison for ponzi schemes...

[lorenzo48]

03:16 PM on 06/29/2011

This was related to the acquisition of Countrywide Credit at the height of the financial mess 4 years ago by Bank of America. The true culprit is Angelo Mozillo former CEO of Countrywide who orchestrated billions of dollars of bad loans, packaged them up and sold them off as investment grade credits, made himself a couple hundred million, bought off a few congressman and senators, was forced to give back about 20% of his fraudulently made money and is now working on his tan in Monaco. Crony capitalism at its finest.

[John Shaw]

07:14 PM on 06/29/2011

Then if B of A sold debentures or portfolio shares with these securities as underlying assets (backing up the portfolio or as collateral for new structured debt), then they would have known that what they were selling was bunk and its essentially fraud.

So back to my original question. Why are they settling instead of a full criminal indictment?

[bcinu2]

10:13 PM on 06/29/2011

I have tried to understand this same thing, and all I can see is the fat cats screwing the people the government is supposed to protect. The hell with the economy. go to the courts and tear up all the deeds and such. tear up all of the security notes filed in each county. Burn the banks and begin a real revolution. If you have friends who have become homeless write up phony leases and have them occupy the homes that are vacant from foreclosure action. Leases can be found in any office supply store. Time to take it all back from those who would destroy the average men and women of this great Country...They have pissed me off to be sure, and really at this time a revolution is needed as their is no government entity that will protect us.
Damn saving the economy, revolution is what is needed. I am a liberal independent, even though I might be sounding like a tea bager, just for any one wanting to know or wondering. We are all hurting from the actions of less then 3% of our population who now are in possession of the majority of the countries wealth. The time for leaving it up to the government has passed us by.
It will not stop until the people rise up and stop it.....bc