Monday, January 7, 2013

BofA Earmarks $11.7 Billion to Cap Fannie Mae’s Claims

Bank of America Corp. agreed to an $11.7 billion package designed to resolve most mortgage disputes with U.S.-owned Fannie Mae after a deal announced two years ago proved inadequate, Bloomberg people say.

Bank of America will make a $3.6 billion cash payment, spend $6.75 billion to buy back residential loans sold to Fannie Mae, and pay $1.3 billion in fees for taking too long to assist or foreclose on overdue borrowers, according to separate statements. Even after these costs and an additional $2.5 billion for expenses that include litigation and a separate regulatory settlement, the Charlotte, North Carolina-based lender said the fourth quarter was “modestly” profitable.

It’s the latest effort by Chief Executive Officer Brian T. Moynihan to cap the damage caused by his predecessor’s takeover of Countrywide Financial Corp. and its defective subprime home loans….

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