Bank of America to end mortgage mess soon
Bank of America Corp announced more than $14 billion of legal settlements over bad mortgages it sold to investors and flaws in its foreclosure process, taking the bank a step closer to ending the home loan problems that have dogged it for years.Updated: Jan 08, 2013 22:40 IST
Bank of America Corp announced more than $14 billion of legal settlements over bad mortgages it sold to investors and flaws in its foreclosure process, taking the bank a step closer to ending the home loan problems that have dogged it for years.
About $3 billion of Bank of America’s Monday’s settlements were part of a larger $8.5 billion deal between 10 big mortgage lenders and regulators to end a loan-by-loan review of foreclosures mandated by government.
Bank of America shares touched their highest level in nearly two years as investors called it a good step to ending the company’s multiple legal woes. Shares retreated to close down 0.2% at $12.09.
Analysts have estimated that Bank of America has paid out some $40 billion for mortgage settlements since the crisis began. Most losses stem from its 2008 purchase of Countrywide Financial — once the largest subprime lender in the US.
But the bank is moving closer to the day when it can stop worrying about mortgages and start focusing on growth, analysts and investors said.
“It’s a step in the right direction in terms of trying to put these issues behind the firm” said Jonathan Finger of Finger Interests Ltd, a Houston, Texas-based investment firm that owns 1.1 million of bank shares.
Besides the multibank foreclosure settlement, the second largest US bank also announced $11.6 billion of settlements with government mortgage finance company Fannie Mae to end allegations the bank improperly sold mortgages that later soured, and to resolve questions about foreclosure delays.
The bank had already set aside money to cover most of those settlements. The deal with Fannie wipes out 44% of the buy-back requests the bank faced as of the end of the third quarter.