Bank of America to Pay Freddie Mac $404M Over Sale of Subprime Mortgage Loans

Bank of America to Pay Freddie Mac $404M Over Sale of Subprime Mortgage Loans

 CHARLOTTE, N.C. — (Mealey’s) Bank of America Corp. announced on Dec. 2 that it has reached an agreement with Freddie Mac to pay $404 million “to resolve all remaining representations and warranties claims for residential mortgage loans sold to Freddie Mac through the end of 2009.”

According to Bank of America’s press release announcing the settlement, “[u]nder terms of the agreement, Bank of America will pay Freddie Mac a total of $404 million (less credits of $13 million) to resolve all outstanding and potential mortgage repurchase and make-whole claims related to loans sold to Freddie Mac from January 1, 2000 to December 31, 2009, and to compensate Freddie Mac for certain past losses and potential future losses relating to denials, rescissions and cancellations of mortgage insurance.”

“The payments are fully covered by existing reserves as of September 30, 2013,” Bank of America said.

Warranties Claims

The agreement is the second Bank of America has reached with Freddie Mac.  Bank of America previously reached an agreement with Freddie Mac to resolve all claims “related to whole loans sold by legacy Countrywide to Freddie Mac through 2008, and a pair of agreements with Fannie Mae that, taken together, resolved all outstanding and potential representations and warranties claims related to whole loans sold by legacy Countrywide and legacy Bank of America to Fannie Mae through 2008.”

“With this settlement, Bank of America has resolved all outstanding and potential representations and warranties claims on whole loans sold by legacy Bank of America and Countrywide to Fannie Mae and Freddie Mac through the dates outlined above, subject to certain exceptions which Bank of America does not believe are material,” Bank of America stated, adding that “[t]oday’s agreement does not cover loan servicing obligations, loans contained in private label securitizations or securities and disclosure claims.”

The press release is available online at http://investor.bankofamerica.com/phoenix.zhtml?c=71595&p=irol-newsArticle&ID=1880926&highlight=#fbid=ZFthygx7A-3.

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