Bank of America reaches $8.5 billion settlement over bad mortgages

Miami /
Jun.June 29, 2011 11:34 AM

Bank of America agreed to pay $8.5 billion to investors nationwide to settle claims that it sold bad mortgages, and according to Crain’s, the payment stabilized the bank in the eyes of investors. A group of 22 investors, including the Federal Reserve Bank of New York, initially demanded that the bank repurchase $47 billion in subprime mortgage-backed securities that it sold to them as bonds. They argued that the bank profited by continuing to service the bad loans while its investors bled cash. The settlement covers 530 trusts with an original balance of $424 billion, and must still be approved by a court. Most of the failed mortgages were sold by Countrywide, which BofA bought for $4 billion in 2008. Despite the magnitude of the settlement, it represents just 2 percent of the original principal balance, and Crain’s said the settlement allows the bank to put uncertainty behind it and improve performance. Though the settlement puts BofA’s second-quarter losses at $9 billion, the company’s stock rose more than 4 percent before the market opened, as news circulated that a settlement had been reached. [Crain’s]


Related Articles

arrow_forward_ios
Renderings of the Mainstreet at Boynton Beach mixed-use project with Pebb Enterprises’ President and CEO Ian Weiner (Pebb Enterprises)
Pebb, Banyan sell outparcel at Sprouts-anchored Boynton Beach project
Pebb, Banyan sell outparcel at Sprouts-anchored Boynton Beach project
220 Alhambra Circle in Coral Gables, FL. and Fortress Investment Group’s Wesley Edens and Pete Briger Jr. (Google Maps, Getty, Long Arc)
Fortress buys Amerant’s Coral Gables HQ building for $135M in sale-leaseback deal
Fortress buys Amerant’s Coral Gables HQ building for $135M in sale-leaseback deal
4238-4276 Northwest 7th Street in Miami, Avison Young’s Michael Fay, John Crotty, David Duckworth, Brian de la Fé, Emily Brais and Berkley Bloodworth
Mixed-use Le Jeune Road dev site heads to market for $17M
Mixed-use Le Jeune Road dev site heads to market for $17M
Vlad Doronin, Len Blavatnik, and 3425 Collins Avenue (Credit: Google Maps, Gesi Schilling, and Mark Neyman / GPO)
Developer of Aman-branded towers in Miami Beach scores $35M loan
Developer of Aman-branded towers in Miami Beach scores $35M loan
Rendering of 57 Ocean and Marcelo Kingston (Credit: DBOX)
57 Ocean in Miami Beach scores $59M construction loan
57 Ocean in Miami Beach scores $59M construction loan
JPMorgan Chase CEO Jamie Dimon (Credit: Win McNamee/Getty Images, Google Maps, iStock)
JPMorgan Chase buys own branch in West Palm
JPMorgan Chase buys own branch in West Palm
South Florida lenders and landlords battle new coronavirus reality
South Florida lenders and landlords battle new coronavirus reality
South Florida lenders and landlords battle new coronavirus reality
Moishe Mana and 25 West Flagler Street
Moishe Mana buys City National Bank building in downtown Miami
Moishe Mana buys City National Bank building in downtown Miami
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...