“Bank of America is paying $6.3 billion to settle a lawsuit arising out of troubled mortgage-backed securities it cobbled together and sold to Fannie Mae and Freddie Mac in the run-up to the financial crisis.
“The bank agreed on Wednesday to pay that sum to settle a lawsuit filed on behalf of the two government-sponsored mortgage finance firms by their regulator, the Federal Housing Finance Agency. As part of the settlement, Bank of America will also repurchase mortgage securities from Fannie and Freddie that are valued at about $3.2 billion.
“The agreement covers what are known as private-label mortgage-backed securities sold by Bank of America and its affiliated entities like Countrywide Financial and Merrill Lynch.
“Bank of America said the settlement with the housing regulator was expected to reduce its first-quarter income by about $3.7 billion before taxes. The bank is scheduled to report its earnings on April 16.”
Read full NY Times Dealbook article here.