Bank of America announced this morning that it will pay the Federal National Mortgage Association (Fannie Mae) $3.6 billion in cash and will buy back $6.75 billion worth of mortgages to resolve claims related to mortgage-backed securities sold to Fannie Mae by the bank and Countrywide Financial Corp. (which BofA acquired in 2008.
As Planet Money has explained before, “during the housing boom, banks sold investors bundles of mortgages that were shoddier than promised, according to lawsuits the federal government” has filed. Now, BofA is resolving the claims against it from Fannie Mae.
Word about Bank of America’s settlement with Fannie Mae comes as The New York Times reports that “a $10 billion settlement to resolve claims of foreclosure abuses by 14 major lenders is expected to be announced as early as Monday, several people with knowledge of the discussions said on Sunday. … An estimated $3.75 billion of the $10 billion is to be distributed in cash relief to Americans who went through foreclosure in 2009 and 2010, these people said. An additional $6 billion is to be directed toward homeowners in danger of losing their homes after falling behind on their monthly payments. All 14 banks , including JPMorgan Chase, Bank of America and Citigroup, are expected to sign on.”