Stocks - World - Finance - Business - Real Estate - Politics - Movies - Music - Sports - Home


Article posted on 1/3/11
Author: Kelly Curtis



Bank of America Pays $2 Billion to Fannie, Freddie

Bank of America Corp. has paid $2.8 billion to mortgage giants Fannie Mae and Freddie Mac after the two federally-run companies demanded the bank buy back mortgages they say were based on faulty data. Shares of Bank of America, the nation's largest lender in terms of assets, rose more than 5.5 percent in the first half of Monday's trading.

In all, the disputes have cost the bank about $3 billion during 2010's fourth quarter, which includes adding loss reserves for loans not part of the deal announced on Monday. Mortgage companies like Fannie and Freddie are trying to force lenders to repurchase loans that were sold with erroneous data on income and home values. Prior to the announcement on Monday, BoA faced close to $13 billion in unresolved buyback demands, of which about half concerned government sponsored entities. The Charlotte, NC-based bank announced in October it had set aside $4.4 billion in reserves to take care of the issue.

Bank of America's stock declined by 11 percent over the course of 2010, the largest loss among the nation's ten largest banks. BoA also wrote down the value of its mortgage division by $2 billion and acknowledged that it still faces a number of putback claims from investors and insurers. MBIA Inc has sued the bank, claiming that it was fraudulently convinced to insure $21 billion in toxic mortgage-backed securities. Another group which includes the Federal Reserve Bank of New York and Pacific Investment Management Co. have demanded the bank buy back loans packaged into some $47 billion in bonds.




Stocks - World - Finance - Business - Real Estate - Politics - Movies - Music
Sports Environment - Lifestyle - Science - Technology - Weather - Poli Sci - Food - Home