Bank of America (BAC), the biggest U.S. bank by assets, said it agreed to pay Fannie Mae (FNMA) and Freddie Mac (FMCC) $2.8 billion to settle claims that it sold the mortgage finance companies home loans based on faulty information.
The Charlotte, NC-based bank said in a statement that it will provide a $1.28 billion cash payment to Freddie Mac to resolve claims arising from 787,000 loans (with a total unpaid principal balance of $127 billion) sold through 2008 by “legacy” Countrywide Financial Corp. BofA also said it agreed to pay $1.34 billion in cash to Fannie Mae, after applying “certain credits” to reach an agreed $1.52 billion settlement on 12,045 Countrywide loans.
BofA believes the settlement has resolved its remaining exposure for home loans sold directly to Fannie and Freddie.
BofA shares rose to $13.97, or 4.69%, at 10:48 a.m. in New York trading Monday.
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