BofA Resolves Fannie Mae, Freddie Mac Loan Dispute

[avaistheone1]

Source: Bloomberg

Jan. 3 (Bloomberg) -- Bank of America Corp., the biggest U.S. bank by assets, will take a $2 billion impairment charge and a $3 billion provision in the fourth quarter to resolve mortgage-repurchase claims by Freddie Mac and Fannie Mae. Bloomberg's Erik Schatzker reports. (Source: Bloomberg)

Bank of America Corp., the biggest U.S. lender by assets, paid $2.8 billion to Freddie Mac and Fannie Mae after the U.S.-owned firms demanded the company buy back mortgages they said were based on faulty data. The bank rose as much as 5.6 percent in New York trading.

Resolving the disputes cost Bank of America about $3 billion in the fourth quarter, including additions to loss reserves for loans that weren’t a part of the deals announced today, the Charlotte, North Carolina-based lender said in a statement. The agreements “largely addressed” liabilities from Fannie Mae and Freddie Mac, Bank of America Chief Financial Officer Charles H. Noski said on a conference call.

Mortgage buyers including McLean, Virginia-based Freddie Mac and Washington-based Fannie Mae are trying to force lenders to repurchase loans that may have been made with incorrect data on income and home values. Before today’s announcement, Bank of America faced $12.9 billion in unresolved putback demands, with about half related to government-sponsored entities, according to an Oct. 19 presentation. The company said in October it had reserved $4.4 billion for costs related to the problem.

Read more: http://www.bloomberg.com/news/2011-01-03/bank-of-america-sees-2-billion-charge-on-home-loans-insurance.html

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That is some piece of change BofA needs to cough up.

[davidwparker]

1. Does this settlement have anything to do with the

imminent WikiLeaks drop? Time and documents will tell.

Good for them now that they have to buy back those loans. Maybe now there will be some motivation to work with those home owners.

[fatbuckel]

2. That,my friend,is the right question.