![Brian Moynihan, left, the chief of Bank of America, and Ken Lewis, the former chief, in 2009.]()
Chris Keane/Reuters Brian Moynihan, left, the chief of Bank of America, and Ken Lewis, the former chief, in 2009.Updated, 9:37 a.m. | Bank of America announced on Monday that it had reached a settlement with Freddie Mac to resolve issues related to residential mortgages the bank sold to Freddie up to 2009, effectively ending all contractual disputes between the two on loans issued before the financial crisis.
The bank said it had agreed to pay $404 million to settle all residential mortgage repurchase agreements and other claims related to loans sold from 2000 to 2009. The bank also agreed to pay for some past and potential losses relating to those loans.
Bank of America said it had set aside reserves to cover the settlement. The company declined to comment beyond its news release.
“We are pleased to have reached this agreement with Bank of America, which now allows both companies to move forward,” said Freddie Mac’s chief executive, Donald H. Layton. “We continue to make very good progress in recovering funds that are due to the American taxpayer, as well as resolving Freddie Mac’s legacy repurchase issues.”
Freddie Mac, the mortgage finance giant that nearly failed five years ago, has reached other settlements with Bank of America. In 2010, the bank agreed to pay the agency and its larger sibling, Fannie Mae, $2.8 billion related to loans made by Countrywide Financial. Earlier this year, it agreed to pay Fannie $11.6 billion, including about $6.6 billion in loans that the bank repurchased.
![Freddie Mac has been able to settle with several banks over residential mortgages sold to the entity before the financial crisis.]()
Jason Reed/Reuters Freddie Mac has been able to settle with several banks over residential mortgages sold to the entity before the financial crisis.Freddie Mac and Fannie Mae took a $188 billion government bailout after subprime mortgages crippled both institutions in the lead-up to the financial crisis. The two entities can now force banks to repurchase loans which do not meet certain standards. Banks must also repurchase loans if the representations and warranties over their creditworthiness proved to be false.
In September, Wells Fargo agreed to pay Freddie Mac $780 million and Citigroup settled for $395 million, to resolve mortgage repurchase liabilities.
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Bank of America Reaches Settlement With Freddie Mac – New York Times
bank – Google News
RACHEL ABRAMS
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Chris Keane/Reuters Brian Moynihan, left, the chief of Bank of America, and Ken Lewis, the former chief, in 2009.
Jason Reed/Reuters Freddie Mac has been able to settle with several banks over residential mortgages sold to the entity before the financial crisis.