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Bank of America in mortgage claims settlement

Published on NewsOK Modified: January 7, 2013 at 2:49 pm •  Published: January 7, 2013
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The government agencies, which were effectively nationalized in 2008 when they nearly collapsed under the weight of their mortgage losses, have been demanding that banks buy back some of the mortgage-backed investments.

In September, Bank of America also agreed to pay $2.43 billion to settle a class-action lawsuit related to its takeover of Merrill Lynch, another of Lewis's acquisitions during the financial crisis. That lawsuit was filed on behalf of investors who bought or held Bank of America stock when the company announced its plans to buy Merrill Lynch in a $20 billion deal as the banking industry and federal regulators struggled to contain fallout from the financial crisis in the fall of 2008.

The Charlotte, North Carolina-based bank said it would pay for the Fannie Mae settlement in part from existing reserves, though it would record a $2.7 billion hit to its fourth quarter earnings for 2012 from the settlement and the loan servicing fees, as well as taking a charge of $2.5 billion for the settlement over wrongful foreclosure practices.

Despite the charges, Bank of America still expects its earnings for the period to be "modestly positive." Bank of America is scheduled to report earnings Jan. 17.

Bank of America fell 8 cents to $12.01 Monday, after opening slightly higher. The stock more than doubled in 2012, making it the best performer in the 30-member Dow Jones industrial average. It's up 3.6 percent this year.

"Fannie Mae has diligently pursued repurchases on loans that did not meet our standards at the time of origination, and we are pleased to have reached an appropriate agreement to collect on these repurchase requests," Bradley Lerman, Fannie Mae executive vice president and general counsel, said in a statement.