The Real Deal New York

BofA weighs $1B sale of real estate assets, another foreclosure settlement

August 16, 2011 06:34PM

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Bank of America is simultaneously considering selling its real estate assets held by Merrill Lynch to Blackstone Group for $1 billion, and settling on a foreclosure agreement that would still allow New York State Attorney General Eric Schneiderman to continue his ongoing probe into the bank’s foreclosure practices, according to two separate Bloomberg News reports.

The assets up for sale include properties in Europe, the U.S. and South America. The bank hired Blackstone to manage $2 billion worth of Merrill’s Asia real estate holdings, but it appears BofA will retain ownership of those investments.

The bank’s foreclosure agreement would pacify several state attorneys general investigating it among a larger group of mortgage servicers for allegedly using fake documents to pursue foreclosures. But New York’s Eric Schneiderman and at least two other attorneys general would be omitted from the agreement so that they can continue ongoing probes. BofA would still prefer a universal settlement but CEO Brian Moynihan is weighing this option as he tries to put mortgage scandals in the bank’s rearview mirror.

The bank has been plagued by bad mortgages — many initiated by the Countrywide division it acquired in 2008 — and has already doled out $30 billion in settlements and writedowns since the start of 2010. Just last week insurer AIG sued the bank for $10 billion alleging BofA misrepresented the quality of mortgages it sold. The repeated settlements and continued uncertainty have driven down the bank’s stock price by 44 percent this year. Bloomberg said the bank wants to lower risk and focus on corporate borrowing, investment banking and retail clients. It recently sold off First Republic Bank, its stake in BlackRock Inc and its Canadian credit-card division. [Bloomberg and Bloomberg]

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