BofA settles loan claims with Freddie Mac for $404 million

Dec. 2, 2013 at 1:16 PM
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CHARLOTTE, N.C., Dec. 2 (UPI) -- U.S. finance giant Bank of America said Monday it would pay $404 million to settle all claims brought by the Federal Home Loan Mortgage Corp.

The bank said the settlement, which includes a credit of $13 million for mortgages the bank has already repurchased, would resolve claims on mortgages sold to Freddie Mac between Jan. 1, 2000, and Dec. 31, 2009.

The bank also said it had the settlement covered by funds already placed in reserve.

With the settlement, the bank said it had put to rest all claims on loans that were sold before the financial crisis to Freddie Mac and Fannie Mae by either Bank of America or Countrywide Financial Corp., which Bank of America bought in 2008.

The loans were sold as solid investment, although many were risky, subprime loans that soured in part because financial firms lowering their standards as they rushed to write more loans.

Freddie Mac and Fannie Mae, the country's largest mortgage brokers, were bailed out by the federal government in 2008 due to the large number of failing loans.

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