Bank of America (BAC) is in talks to pay at least $12 billion to settle several federal and state probes related to the lender’s improper mortgage-bond underwriting practices that took place before and during the 2008 financial crisis, the Wall Street Journal reports.
Sources familiar with that matter told the publication on Thursday that at least $5 billion of that amount is expected to go toward consumer relief consisting of help for homeowners in reducing principal amounts and monthly payments, and paying for blight removal in struggling neighborhoods.
The report also said that the second-biggest U.S. lender is being pressed to pay billions more than the $12 billion it is offering.
If finalized, the settlement would bring the total penalties the Charlotte, NC-based bank has paid in connection with faulty mortgages to more than $22 billion – thus surpassing JPMorgan (JPM)’s record $13 billion global settlement over similar issues last November.
If the two sides cannot reach a deal, the feds would have to decide whether to file a civil lawsuit against the bank, the paper said.
BofA is among at least 8 banking institutions under investigation by the Justice Department, and state AGs over the quality of home mortgages backing bonds sold to investors before the financial crisis.
Shares of Bank of America closed at $15.43 on Thursday.
Disclaimer: This page contains affiliate links. If you choose to make a purchase after clicking a link, we may receive a commission at no additional cost to you. Thank you for your support!