Banks were faced with an unprecedented number of lawsuits in 2012, and 2013 may prove to be another litigation-heavy year for banks. According to the New York Times, Bank of America agreed today to pay more than $10 billion to Fannie Mae to settle a dispute over mortgages that tanked during the housing crash.
Bank of America will now pay the federally-backed housing giant $3.6 billion and will spend an additional $6.75 billion to buy back mortgages from Fannie Mae at a discount to their original value. Most of the loans at issue were originated by Bank of America’s Countrywide Financial subsidiary.
“Together, these agreements are a significant step in resolving our remaining legacy mortgage issues, further streamlining and simplifying the company and reducing expenses over time,” Brian Moynihan, Bank of America’s CEO, said in a statement this morning.
Bank of America also announced that the settlement is expected to hurt its performance in the fourth-quarter by approximately $2.5 billion. [NYT] —Christopher Cameron