BofA Tired Of Fannie Mae, Stops Selling Some Mortgages To Them

* BofA cites Fannie Mae repurchase claims

* Bank still selling loans to Freddie Mac

* BofA freezing pension plan June 30

By Rick Rothacker

Feb 23 (Reuters) - Bank of America Corp has stopped selling some mortgages to Fannie Mae because of a dispute arising from claims related to soured home loans, the bank said in a filing on Thursday.

Starting in February, the second-largest U.S. bank said it stopped delivering home-purchase loans and certain refinanced mortgages to be packaged into Fannie Mae loan securitizations, the bank said.

Bank of America and other large banks have absorbed billions in losses related to requests by Fannie Mae and other investors to buy back defective loans sold to them by banks during the housing boom.

The bank didn't renew a contract with the government-controlled mortgage entity because of "ongoing differences" with Fannie Mae, including repurchase claims, according to the bank's annual 10-K filing. (The filing can be found at)

The Charlotte, North Carolina-based bank is still selling loans to the other major government-controlled mortgage entity, Freddie Mac, bank spokesman Jerry Dubrowski said. It also can hold mortgage loans on its own balance sheet, he said.

The bank remains in talks with Fannie Mae and continues to sell Fannie Mae loans refinanced through the government's Making Home Affordable program, according to the filing.

Bank of America has been dramatically scaling back its mortgage operations after suffering huge losses from its 2008 purchase of subprime lender Countrywide Financial. Last year, it stopped buying mortgages originated by smaller banks, which dropped it to fourth from second in U.S. mortgage origination rankings.

"Our company has streamlined," Dubrowski said. "We are focused on providing credit for our customers, and this decision is consistent with that. We have ended the past practices of Countrywide, which had a significant relationship with Fannie Mae."

Fannie Mae spokesman Andrew Wilson declined to comment.


PENSION PLAN TO BE FROZEN

In Thursday's filing, Bank of America also said it will freeze the benefits employees have earned in its company pension plan as of June 30.

Employees will still be offered a 401(k) retirement plan in which they can set aside a portion of their compensation in an investment account. The bank matches up to 5 percent of employee contributions, and eligible employees will also receive an annual 401(k)contribution of between 2 percent to 3 percent of their salary, bank spokesman Scott Silvestri said.

The move is in line with changes at other large companies, Silvestri said.

Bank of America Chief Executive Brian Moynihan has been slashing costs and selling non-core businesses as he looks to boost profits and build capital to absorb mortgage-related losses. The bank's stock fell 58 percent last year, but the shares have revived this year, climbing 44 percent, as capital concerns have eased.

In the filing, the bank said it will continue to build capital through earnings, shed riskier assets and launch other initiatives. The bank issued 122 million shares of immediately tradable stock to certain employees in February in lieu of a portion of their cash bonuses. The bank may also continue to issue common stock in exchange for preferred stock and trust preferred securities, according to the filing.

Comments

[LoyalDem4646]

10:03 PM on 02/26/2012

So when you privatize your retirement plan, the company can at any time freeze your assets? I don't recall the GOP telling us this when the continually keep telling us privatization of our retirements would be better.

[knewsreply]

08:32 PM on 02/26/2012

Why do Banks only talk about their costs and never the cost and suffering of the people they injured?

[ConnectedTraveler]

06:23 PM on 02/26/2012

That's funny I got tired of Bank America about 7 years ago.

Everyone should pull their money out of this beast and put it in a local Credit Union.

[Joe Krumbach]

09:53 PM on 02/25/2012

I wish they would change their name because they are not:

1) A bank, they are in international business enterprise comprised of various companies.
2) American, because if this is an American way of doing business, we should all be embarrassed.

So how about changing your name to what you are "International Bender of Others Over."

[WhoIsNoOne]

10:08 PM on 02/25/2012

they could go back to the Bank of Italy, but I think Italians
wouldn't like that

[Janzee12000]

04:24 PM on 02/25/2012

I wonder if they're playing a game to get Fannie Mae like the games that were played earlier with the rating companies. I wouldn't put it passed these guys to go back to old habits...

[kamact]

03:25 AM on 02/25/2012

Move your money,...It feels so good,...

[Oginikwe]

11:37 PM on 02/24/2012

Uh-oh. I remember Enron doing this same stuff with their employees.

[Core-Sample]

11:34 PM on 02/24/2012

Their days are numbered.

[grizzly bear55]

08:25 PM on 02/25/2012

Wishful thinking.

[stroses]

10:28 PM on 02/24/2012

I appreciate those of you that step forward to share your experiences working in this industry. It's a shame that many of us have fallen prey to the whole mortgage meltdown and can't get any assistance either from the government or the banks.

We need to stand united and not blame us homeowners.

[Sam D man]

07:13 PM on 02/24/2012

I got a Letter from BofA ( Bank Of Antartica ) the other day
It stated Sam D man we are foreclosing on your home in 3 days.
I sent it back with a note that read.
I DONT OWN YOU S&^%$#@Ks I RENT !!!!!!
A week went by and they replied with an invite that read
Stop by one of our branches an experience our cold blooded service
as we facilitate you with a home mortgage loan to suit our greed.
So we may then foreclose in a not to far away future.
I wiped my a%$ with it and sent it back...Havent heard from them since.

[cats530]

06:14 PM on 02/24/2012

"Today, Bryan Moynihan is known for an uncanny ability to put a positive spin on any situation, which I find a lovely euphemism for saying he lies well, assuming such a thing is possible. He’s driving a financial institution that required TWO federal bailouts totaling $45 BILLION in cash, to say nothing of the federal guarantees, and is today being sued by so many consumers and investors that I can’t even keep up anymore. As of the end of 2010, more than 1.3 million of the bank’s mortgage customers were delinquent on their loans, close to 200,000 of those haven’t made a payment in at least two years, and a third of the homes facing foreclosure are now vacant, making them costly to maintain and, shall we say, a tad difficult to sell. A report issued by Moody’s at the end of last year showed that when talking about resolving delinquent sub-prime loans, Bank of America lagged behind ALL of the other six major servicers."

http://mandelman.ml-implode.com/2011/04/bank-of-americas-tasmanian-devil-says-we-shouldnt-be-thinking-of-our-homes-as-assets/

[DIYgirl]

03:47 PM on 02/24/2012

what most people don't understand is that a large majority of the loans that Fannie Mae is requiring BofA to buy back are in fact old Countrywide loans. Since it is now known the cozy relationship that Countrywide had with Fannie Mae and some congressmen that Fannie was not auditing the files or enforcing the requirements very closely but when the bottom fell out they wanted to retro-enforce the guidelines since Bank of America was now there to pay.
Bank of America should have never made that deal.... but it's too late now and uninformed people, like some who post here, blame BofA for all that Countrywide did or even Moynihan who wasn't even in charge before or during the merger. Misplaced anger....

[cats530]

06:06 PM on 02/24/2012

Oh, poor poor B of A. BS!

[cats530]

06:25 PM on 02/24/2012

Article by William Black, expert on control fraud:

"If B of A employees conducted extensive due diligence of Countrywide and could not discover its obvious, endemic frauds, abuses, and subverted systems then they are incompetent. Indeed, that word is too bloodless a term to describe how worthless the due diligence team would have had to have been. Given the many acquisitions the due diligence team vetted, B of A would have been doomed because it would have routinely been taken to the cleaners in those earlier deals. That scenario, the one B of A presents, is not credible. It is far more likely that B of A’s senior management made it clear to the head of the due diligence review that the deal was going to be done and that his or her report should support that conclusion. This alternative explanation fits well with B of A’s actual decision-making. Countrywide’s (and B of A’s) reported financial condition fell sharply after the deal was signed. Lewis certainly knew that B of A’s actual financial condition was much worse than its reported financial condition and had every reason to believe that this difference would be even worse at Countrywide given its reputation for making fraudulent loans."

http://jhaines6.wordpress.com/2011/10/20/not-with-a-bang-but-a-whimper-bank-of-america%E2%80%99s-death-rattle/

P.S. Are you from B of A's spin control department or a paid astroturfer? You're schtick just isn't credible. Better work on some new material.

[jenred1]

03:33 PM on 02/24/2012

First of all, Bank of America was responsible for doing their due diligence in the CountryWide purchase. Let's face it, they did the same types of loans that Countrywide did and I do not feel one bit sorry for them. They all did B/C lending and as a lender that has had to pay the price for their poor lending practices....they get what they deserve. Why should they be exempt from buying back bad loans. As a small credit union based lender, I am held to strict standards that are so over the top that is is crazy to do business now. It was not because of my companies actions, but from the huge lenders that did correspondent lending with brokers and thought they were exempt from the rules. The Fed went after all the small guys first and now that they are holding the big guys up to the same light, they are crying foul. Even with the hits from Countrywide, they made billions. I have a small pension $169,99 a month for my 5 years of service that B of A controls...I will not count on that in the future. Take my advice and go to your local CREDIT UNION. They are the best and when was the last time you could call the CEO or President of a bank and talk to them. You can with a credit union.

[DIYgirl]

04:30 PM on 02/24/2012

i will agree with you that Bank of America is a sucker for not doing the due diligence or maybe there were other factors involved in the purchase that outweighed the crappy loans and fraud that was Countrywide but I've been around mortgages for a very long time and BofA and formally NationsBank never did subprime loans. They used to have a subsidary called Nations Credit years and years ago but i think they did mostly car and unsecured loans. So I'm not sure where you got your information.

[jenred1]

05:08 PM on 02/24/2012

I have 28 years in mortgage lending. I have sold B/C loans to B of A. B/C also includes interest only, No Doc and other high risk loans such as ARM's. Not just credit challenged loans. All these companies let appraisals go through that had high net and gross adjustments that were not acceptable. They knew they were letting people get into homes they could not afford. It was a choice they made and now they do not want to buy back loans. Does having a subsidary make you clean? Well, Countrywide had their own subsidary and it was their death. I worked for Countrywide from 1986 to 1992. The company they became was not the one I worked for for 6 years. I think anyone in the business for over 20 years can say that about any company they worked for. The large lenders are working for the stockholders and the employees are the last thing they think about. The majority of loans that have gone bad are the "everyday joe" that had an ARM rate go up or his interest only could not get refinanced due to the lack of equity, he could not make the payment or sell the house to get out. When you see a large scale failure in the payments from the Middle Class section of this country.....you know it is going to be bad for the economy.

[bookreader451]

07:25 PM on 02/24/2012

They also kept Countrywide as a separate entity, so they could file bankruptcy on the subsidiary of they needed to. It has sucked them dry but they built in an out

[sf omega man]

02:45 PM on 02/24/2012

Bank of America still has not recovered a dime from Countrywide CEO Mozilo, the Orange One. In fact, they paid for his legal fees and mega-million dollar fines.

Shareholders, bondholders, employees, all suffer. But who cares? As long as the executives are taken care of... that's all that matters.

[cats530]

06:07 PM on 02/24/2012

yes, Agent Orange is vomitous.

[giwel7]

06:16 PM on 02/24/2012

they never planned on recovering any money from Mozilo and in fact they pay him %500 thousand a year for "consulting " fees plus legal fees. that was an agreement when they did the defacto merger. ken lewis ceo at the time and mozilo were very close since 1969. many of the loans with countrywide were tied in with bank of america before the merger. for the media to keep wriiting about "poor " bank of america . they knew what they were doing and so did the government

[Jen Celli]

01:51 PM on 02/24/2012

Yeah, hurt the rank and file employees through their pension but don't bother to scale back the salaries and bonus' of Moynihan and the other overpaid executives that destroyed the economy.