Charlotte, NC, United States (AHN) – Bank of America repurchased $2.5 billion in debt from Fannie Mae and Freddie Mac because of complaints from the two largest mortgage firms that the mortgages were based on faulty data.

The bank agreed to buy back the mortgages to resolve the dispute.

The repurchase actually cost BofA approimate $3 billion, which included loss reserves for loans that were not part of the agreement.

The buyback may cause similar settlements by other large U.S. banks such as Wells Fargo, Citigroup and Washington Mutual as mortgage buyers try to force the banks to repurchase loans made with incorrect income data and wrong home values.

In October, BofA disclosed that it has $12.9 billion unresolved put-back demands, 50 percent of which were linked to government-sponsored entities. BofA then said it reserved $4.4 billion for costs related to the problem.

After the buyback, BofA’s shares rose 61 cents to $13.95 at the New York Stock Exchange composite trading.

In addition to the Fannie Mae and Freddie Mac claims, BofA faces a lawsuit from MBIA which claimed the bank fraudulently induced MBIA to insure $21 billion in mortgage-backed securities.

The Pacific Investment Management Company and Federal Reserve Bank of New York similarly demanded from BofA repurchase on loans packaged into $47 billion of bonds.

Fannie Mae and Freddie Mac, bond insurance companies and private investors still have $2 trillion of bad loans.

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This entry was posted on Wednesday, June 22nd, 2011 at 7:01 pm and is filed under Business Loans. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.

Charlotte, NC, United States (AHN) – Bank of America repurchased $2.5 billion in debt from Fannie Mae and Freddie Mac because of complaints from the two largest mortgage firms that the mortgages were based on faulty data.

The bank agreed to buy back the mortgages to resolve the dispute.

The repurchase actually cost BofA approimate $3 billion, which included loss reserves for loans that were not part of the agreement.

The buyback may cause similar settlements by other large U.S. banks such as Wells Fargo, Citigroup and Washington Mutual as mortgage buyers try to force the banks to repurchase loans made with incorrect income data and wrong home values.

In October, BofA disclosed that it has $12.9 billion unresolved put-back demands, 50 percent of which were linked to government-sponsored entities. BofA then said it reserved $4.4 billion for costs related to the problem.

After the buyback, BofA’s shares rose 61 cents to $13.95 at the New York Stock Exchange composite trading.

In addition to the Fannie Mae and Freddie Mac claims, BofA faces a lawsuit from MBIA which claimed the bank fraudulently induced MBIA to insure $21 billion in mortgage-backed securities.

The Pacific Investment Management Company and Federal Reserve Bank of New York similarly demanded from BofA repurchase on loans packaged into $47 billion of bonds.

Fannie Mae and Freddie Mac, bond insurance companies and private investors still have $2 trillion of bad loans.

View full post on Buyback Stories

This entry was posted on Wednesday, June 22nd, 2011 at 7:01 pm and is filed under Business Loans. You can follow any responses to this entry through the RSS 2.0 feed. Responses are currently closed, but you can trackback from your own site.