Bank of America Tuesday struck deals to settle lending complaints, sell rights to service $300bn of mortgages and repair relations with regulators. For CEO Brian Moynihan, it offers his best chance to rebuild the home lending business.
Bloomberg reports that the firm reached an $11.7bn agreement designed to resolve most disputes with Fannie Mae two years after Moynihan said the bank 'largely addressed' the liabilities. It sold the rights to service about 2 million mortgages, and with 9 other banks, will pay $8.5bn to end reviews of foreclosure-abuse claims stemming from a 2011 deal with regulators.
'Resolving legacy issues allows the bank to shift attention from non-revenue-generating activities to focusing on growing business', said Kevin Choquette, an analyst at Scotia Capital Inc. in Toronto. 'You’re going from defense to offense'.
The Fannie Mae settlement covers most claims from the bank’s single biggest mortgage adversary, which had purchased $1.4 trillion in loans from Bank of America and Countrywide Financial Corp. It’s the latest effort by Moynihan to cap the damage caused by his predecessor’s 2008 takeover of Countrywide as the U.S. housing market imploded. The firm has tallied almost $50bn in costs tied to covering refunds and litigation from faulty mortgages and foreclosures.
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