Home Loans Ruling to Cost BOA $2 Billion
Home loans are a major portion of Bank of America's business. Thanks to a recent ruling, it will also cost BOA about $2 billion.Bank of America Corp. says it will take an approximately $2 billion charge in its fourth quarter as it settles buyback claims on home loans sold to Fannie Mae and Freddie Mac.
The bank said Monday that it also expects to take a provision of about $3 billion provision in the quarter related to repurchase obligations on home loans.
Bank of America shares jumped 3.5 percent in premarket trading.
The deals with Fannie Mae and Freddie Mac are tied to Countrywide Financial Corp. residential mortgage loans. Bank of America bought Countrywide in 2008.
"These actions resolve substantial legacy issues in the best interest of our shareholders," Bank of America CEO Brian Moynihan said in a statement.
On Friday Bank of America paid Fannie Mae $1.34 billion and Freddie Mac $1.28 billion as part of their settlements.