BofA Reaches $9.5 Bln. Mortgage Settlement With FHFA

(RTTNews) - Bank of America Corp. (BAC) Wednesday said it has agreed to pay about $9.5 billion to settle a litigation with Fannie Mae (FNMA.OB) and Freddie Mac (FMCC.OB) related to mortgage-backed securities.

The Federal Housing Finance Agency (FHFA), the conservator of Fannie Mae and Freddie Mac, had claimed that Bank of America had falsely represented the mortgage loans and had violated federal and state securities laws related to residential mortgage-backed securities sold to Fannie Mae and Freddie Mac between 2005 and 2007.

Approximately $57.5 billion of private-label residential mortgage-backed securities (RMBS) purchased by Fannie Mae and Freddie Mac are covered by the settlement.

Bank of America has agreed to pay about $6.3 billion in cash to Fannie Mae and Freddie Mac and also purchase certain RMBS at fair market value of about $3.2 billion.

Bank of America expects the settlement to negatively impact its first-quarter profit by about $3.7 billion before-tax, or $0.21 per share after tax.

Bank of America, in the statement said, that with settlement it "has now resolved about 88 percent of the unpaid principal balance of all RMBS as to which RMBS securities litigation has been filed or threatened for all Bank of America-related entities."

BAC closed Wednesday's trading at $17.18, down $0.03 or 0.17%, on the NYSE. The stock gained $0.13 or 0.76%, in after-hours trade.