A U.S. housing regulator is seeking at least $6bn from Bank of America to settle civil claims the firm sold faulty mortgage bonds to government-backed finance companies Fannie Mae and Freddie Mac, according to a person with direct knowledge of the discussions
Bloomberg reports that the person requested anonymity because negotiations with the Federal Housing Finance Agency, which are continuing and may not result in a deal, are private. Larry DiRita, a spokesman for Charlotte, North Carolina-based Bank of America, declined to comment and the FHFA’s Denise Dunckel said the regulator doesn’t comment on pending litigation. The Financial Times reported on the proposed settlement amount Sunday.
The FHFA sued Bank of America and 17 other firms over faulty mortgage bonds two years ago in an effort to recoup some of the losses taxpayers were forced to cover when the U.S. took over the failing mortgage finance companies in the wake of the credit crisis. Fannie Mae and Freddie Mac, which are regulated by FHFA, have received $187.5bn in federal aid since then.
Bank of America, led by CEO Brian Moynihan, has sought to limit additional costs from faulty loans after its 2008 takeover of Countrywide Financial helped saddle the bank with more than $40bn in expenses.
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