Bank of America was able to reach an $11.6 billion settlement with government mortgage agency Fannie Mae. The settlement includes claims resulting from mortgage-backed investments that soured during the housing crash that swallowed the whole country in 2007.
The deal regulates Bank of America to pay $3.6 billion in cash to Fannie Mae and buy back the $6.75 billion in loans that the bank and its Countrywide Financial unit sold to the agency from Jan. 1, 2000 through Dec. 31, 2008. The deal includes the 30,000 loans. Moreover, the bank is also paying the $1.3 billion to the agency because of failure to resolve the foreclosure issues quickly.
Statistics show that states with the highest foreclosure rates are California and Florida. On the other hand, these areas are on their way to recovery. Recent news reports show that the market value for Miami and Southwest Florida foreclosure properties
are becoming quite attractive for prospective buyers.
Meanwhile, another settlement was announced between federal regulators and ten major banks and mortgage companies, which include Bank of America, over wrongful foreclosure practices. The billion dollar settlement is said to cover up to the 3.8 million people who were in foreclosure between 2009 and 2010.
The executive director of the Home Ownership Resource Center in Fort Myers, Eddie Felton said in a statement, “The bottom line is; how that money is going to be utilized to help people who are losing or have lost their homes.” He added. “We still see people every day who are struggling to pay their mortgages.”
For Bank of America, the settlement represents “another step closer to normal,” according to Wells Fargo analyst Matt Burnell. The deal was good for the bank because it has resolved the dispute with the government agency and will likely decrease the provisions it has to set aside to cover claims from investors because of faulty mortgages.
In September, the controversial bank agreed to reimburse $2.43 billion to settle a class-action lawsuit related to its takeover of Merrill Lynch, which is another of Lewis’ acquisitions throughout the financial crisis. The claim was filed on behalf of investors who bought or held Bank of America stock when the company announced its plans to acquire Merrill Lynch in a $20 billion deal.