News Column

Bank of America set for $16bn bill over dodgy mortgage sales

August 8, 2014

ARUNA VISWANATHA



BANK of America Merrill Lynch is set to pay more than three years of profits to settle claims it mis-led investors buying portfolios of its mortgages.


The lender is believed to be preparing to pay more than $16bn (9.5bn) to settle the long-running legal battle.


The majority of the bad loans were sold by Countrywide and by Merrill Lynch, before Bank of America rescued them, with encouragement from the govern-ment during the financial crisis.


Bank of America is expected to pay around $9bn in cash and the remainder in assistance to homeowners.


It follows JP Morgan who paid $13bn last year to resolve similar civil fraud claims that it mis-led mortgage bond investors, and Citigroup agreed to pay $7bn over similar charges last month.


The bank has been keen to clean up the case, but has reportedly run into problems negotiating with the Department of Justice.


Bank of America's shares fell 0.53 per cent on the day to end on $15.12.


Reuters


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Source: City A.M. (UK)


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