Bank of America in mortgage settlement totaling more than $10B

Bank of America says it will spend more than $10 billion to settle mortgage claims resulting from the housing meltdown. Under the deal announced this morning, the bank will pay $3.6 billion to Fannie Mae and buy back $6.75 billion in loans that the North Carolina-based bank and its Countrywide banking unit sold to the government agency from Jan. 1, 2000, through Dec. 31, 2008. That includes about 30,000 loans. CEO Brian Moynihan says the agreements were “a significant step” in resolving the bank’s remaining legacy mortgage issues while streamlining the company and reducing future expenses. Bank of America bought Countrywide Financial Corp. in July 2008, just before the financial crisis. Countrywide was a giant in mortgage lending, but was also known for approving risky loans. Fannie Mae and Freddie Mac, which packaged loans into securities and sold them to investors, were effectively nationalized in 2008 when they nearly collapsed under the weight of their mortgage losses. Bank of America’s purchase of Countrywide originally was lauded by lawmakers because the bank was viewed as stepping in to eliminate a bad actor from the mortgage market. But instead of padding Bank of America’s mortgage business, the purchase has drawn a succession of regulatory fines, lawsuits and losses. Bank of America says that the loans involved in the settlement have an aggregate original principal balance of about $1.4 trillion. The outstanding principal balance is about $300 billion. More details can be found in the full story here.