"We thought this would be dragged out at least another two years."
Good discussion yesterday on Bloomberg. FBR banking analyst Paul
Miller on BofA's agreement to pay Fannie Mae $11.7 billion to resolve
home-loan repurchase claims.
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BofA Settles Fraud With Fannie Mae For $12B, Moynihan Escapes Countrywide
Bloomberg
Bank of America will make a $3.6 billion cash payment, spend $6.75
billion to buy back residential loans sold to Fannie Mae, and pay $1.3
billion in fees for taking too long to assist or foreclose on overdue
borrowers, according to separate statements. Even after these costs and
an additional $2.5 billion for expenses that include litigation and a
separate regulatory settlement, the Charlotte, North Carolina-based
lender said the fourth quarter was “modestly” profitable.
It’s the latest effort by Chief Executive Officer Brian T. Moynihan
to cap the damage caused by his predecessor’s takeover of Countrywide
Financial Corp. and its defective subprime home loans. Before today,
the bank committed more than $40 billion since 2007 to cover the costs
of refunds and litigation tied to faulty mortgages and foreclosures.
Much of that sum went to the government-sponsored entities of Fannie
Mae and Freddie Mac.
“This does put the GSE stuff behind it,” said Paul Miller, an FBR
Capital Markets Corp. analyst who has a hold rating on Bank of America
shares. “We thought this would be dragged out many years, or at least
another two years.”
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