Bank of America Corp. may have to pay up to $13 billion to resolve federal and state investigations into the sale of faulty mortgages originated mostly by Countrywide Financial and Merrill Lynch, which Bank of America acquired in 2008, Bloomberg News reports.
The settlement would come on top of the $9.5 billion settlement Bank of America agreed to last month to resolve claims regarding the sale of faulty mortgages to government-sponsored enterprises Fannie Mae and Freddie Mac between 2005 and 2007.
If the U.S. Department of Justice (DOJ) rules that Bank of America must pay the $13 billion, then that would bring the total penalties that the bank has paid in connection with faulty mortgages to more than $22 billion – thus eclipsing the record $13 billion settlement that JPMorgan reached with the DOJ this past fall.
That settlement, which included a $4 billion agreement with the FHFA, involved faulty loans originated by Washington Mutual Inc. and Bear Stearns Cos., which JPMorgan acquired following the start of the housing meltdown in 2008.
It would appear, however, that the DOJ's suit is among the last that Bank of America is facing in connection with the sale of faulty or poorly underwritten mortgage loans. According to the report, it is unclear how much money Bank of America has in reserves to cover the settlement.
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