Bank of America and federal regulators said they have reached a $10 billion agreement on loans that contributed to the U.S. financial crisis.
In statements released Monday, the giant mortgage broker known as Fannie Mae, the Federal National Mortgage Association, said Bank of America would buy back 30,000 mortgage loans originated from Jan. 1, 2000, through Dec. 31, 2008, at "par plus accrued interest," spending about $6.75 billion to do so, and pay $3.55 billion to cover bank fees.
The comprehensive agreement also includes Fannie Mae granting Bank of American permission to transfer servicing rights on 941,000 mortgage loans to other financial firms. In a statement BofA said the loans involved in that part of the agreement were worth $306 billion.
"A favorable resolution of this long-standing dispute between Fannie Mae and Bank of America is in the best interest of taxpayers," said Fannie Mae Executive Vice President and General Counsel Bradley Lerman.
"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," said BofA Chief Executive Officer Brian Moynihan.
Moynihan said the bank was "resolving legacy mortgage issue," concerning loans granted by BofA and by Countrywide Financial Corp., which BofA purchased in July 2008.
