Bank of America Home Loans Settlement Nearly Finalized
Bank of America is close to finalizing an $8.5 billion settlement payment to a group of blue-chip investors that say the bank sold them poor-quality mortgage-backed securities that tanked during the housing crisis, the Associated Press reports.
Bank of America said it was continuing talks late Tuesday with the group of investors, which includes Pimco Investment Management, Blackrock Financial Management and the Federal Reserve Bank of New York.
An agreement is expected to be announced early Wednesday, a person familiar with the settlement talks told the Associated Press.
The deal comes eight months after the group of blue-chip investors sent a letter to Bank of America demanding the company repurchase $47 billion in mortgages that its Countrywide unit sold to them in the form of bonds.
According to the group, Countrywide’s practice of modifying loans resulted in faulty paperwork and breached signed agreements, the Associated Press reports. Countrywide, by continuing to service bad loans rather than speed up foreclosures, profited at the expense of the investors, the group added.
Bank of America, which paid $4 billion for Countrywide in 2008, has dismissed the accusations that its handling of loan modifications and foreclosures has violated the terms of the mortgage-backed securities held by investors.