Bank of America has reached an agreement with the Federal Home Loan Mortgage Corporation (Freddie Mac) to resolve all remaining representations and warranties claims for residential mortgage loans sold to Freddie Mac through the end of 2009.
Under 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 bank said that its payments were fully covered by existing reserves as of September 30, 2013.
Bank of America previously reached an agreement with Freddie Mac to resolve all outstanding and potential representations and warranties claims related to whole loans sold by Countrywide (now owned by Bank of America) 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 Countrywide and Bank of America to Fannie Mae through 2008.
With the new $404 million settlement, Bank of America has resolved all outstanding and potential representations and warranties claims on whole loans sold by Bank of America and Countrywide to Fannie Mae and Freddie Mac through the dates outlined above, subject to certain exceptions that Bank of America said it does not believe are material.
The $404 million settlement does not cover loan servicing obligations, loans contained in private label securitizations, or securities and disclosure claims.
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