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.
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)
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