The U.S. Department of Justice is asking Bank of America (BAC) to pay more than $13 billion to settle federal and state litigations related to the lender’s improper mortgage-bond underwriting practices that took place during the 2008 financial crisis, Bloomberg News reports.
Sources familiar with that matter told the publication on Thursday that negotiations between the two parties were still in early stages and if a deal isn’t reached, the government could sue the 2nd-biggest US lender. On the other hand, any settlement with the DOJ would be in addition to the $9.5 billion agreement the bank reached last month with the FHFA over mortgage securities sold to Fannie Mae and Freddie Mac between 2005 and 2007. A possible agreement could come within the next two months, according to people familiar with the matter cited by Bberg.
If the DOJ rules that BofA must pay the $13 billion, then that would bring the total penalties that the Charlotte, NC-based bank has paid in connection with faulty mortgages to more than $22 billion – thus eclipsing JPMorgan (JPM)’s record $13 billion global settlement over similar issues last November.
BofA is among at least 8 banks under investigation by the DOJ, and state AGs concerning the quality of home mortgages backing bonds sold to investors.
Shares of Bank of America closed at $15.95 on Friday.