Bank of America, Freddie Mac Settle Repurchase Claim

Bank of America has settled anotherrnclaim for loans it either originated during the housing boom or acquiredrnthrough its purchase of another lender. rnThe latest in the series of settlements was announced today by FreddiernMac and will cost the Bank $404 million less a credit of $13 million for loanrnrepurchases already made and other accounting adjustments.</p

Under terms of the recent agreement,rnFreddie Mac will release Bank of America from certain existing and futurernpurchase obligations for approximately 716,000 loans purchased by FreddiernMac.  The loans were mainly originatedrnbetween 2000 and 2009.  The moneyrncompensates Freddie Mac for certain past losses and potential future lossesrnrelating to denials, rescissions, and cancellations of mortgage insurance.</p

While information released by FreddiernMac was sketchy, it appears this is the final agreement arising out ofrndiscussions widely reported in mid-November. rnThose negotiations involved more the $1.4 billion in allegedly defectivernmortgages and sources at that time said Bank of America was anxious to finalizernthe agreement before the end of the year.</p

This would be at least the secondrnsettlement between the Bank and Freddie Mac since 2011.  The original source of the loans was notrnannounced, but many of the legal problems faced by Bank of American have arisenrnout of the bank’s purchase of Countrywide Mortgage shortly before the housingrnboom began to unwind.  </p

“We are pleased to have reached this agreement with Bank of America,rnwhich now allows both companies to move forward,” said Freddie Mac CEOrnDonald H. Layton. “We continue to make very good progress in recoveringrnfunds that are due to the American taxpayer, as well as resolving Freddie Mac’srnlegacy repurchase issues.”

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