The Bank of America Corp. is finishing an agreement to pay $8.5 billion to settle claims by a group of high-profile investors who lost money on mortgage-backed securities purchased before the U. S. housing collapse, according to people familiar with the matter, the lead front-page article by Dan Fitzpatrick in today's edition of The Wall Street Journal reported.
The payment would be the largest such settlement by a financial services firm to date, exceeding the total profits of the Charlotte, N.C. bank since the onset of he financial crisis in 2008, the article said, and the settlement would end a nine-month light with 22 investors who hold mortgage-backed securities originally valued at $105 million, including BlackRock Inc., MetLife Inc., and the Federal Reserve Bank of New York.
The deal, the article continued, "could embolden mutual-fund managers, insurance companies and investment partnerships to seek similar settlements by arguing that billions of dollars in loans they bought before the housing collapse didn't meet settlers promises ore were improperly managed."
"The dispute between the bank and the mortgage investors began last fall," according to the article, "when they alleged in a letter to the bank that securities they scooped up before the financial crisis from Countrywide Financial Corp., were full of loans that didn't meet sellers' promises about the quality o the borrowers or the collateral. The investors also alleged Countrywide failed to main accurate files while managing the loans. Bank of American purchased Countrywide in 2008 for $4 billion and the acquisition ballooned the size of the bank's mortgage portfolio to 14 million loans, from four million, just as the housing market we set to collapse. It saddled the bank with hundreds of thousands of delinquent borrowers and thrust it into the middle to the foreclosure-paperwork crisis last fall."
The payment would be the largest such settlement by a financial services firm to date, exceeding the total profits of the Charlotte, N.C. bank since the onset of he financial crisis in 2008, the article said, and the settlement would end a nine-month light with 22 investors who hold mortgage-backed securities originally valued at $105 million, including BlackRock Inc., MetLife Inc., and the Federal Reserve Bank of New York.
The deal, the article continued, "could embolden mutual-fund managers, insurance companies and investment partnerships to seek similar settlements by arguing that billions of dollars in loans they bought before the housing collapse didn't meet settlers promises ore were improperly managed."
"The dispute between the bank and the mortgage investors began last fall," according to the article, "when they alleged in a letter to the bank that securities they scooped up before the financial crisis from Countrywide Financial Corp., were full of loans that didn't meet sellers' promises about the quality o the borrowers or the collateral. The investors also alleged Countrywide failed to main accurate files while managing the loans. Bank of American purchased Countrywide in 2008 for $4 billion and the acquisition ballooned the size of the bank's mortgage portfolio to 14 million loans, from four million, just as the housing market we set to collapse. It saddled the bank with hundreds of thousands of delinquent borrowers and thrust it into the middle to the foreclosure-paperwork crisis last fall."
Architecture Critic
Carter Horsley
Since 1997, Carter B. Horsley has been the editorial director of CityRealty. He began his journalistic career at The New York Times in 1961 where he spent 26 years as a reporter specializing in real estate & architectural news. In 1987, he became the architecture critic and real estate editor of The New York Post.
6sqft delivers the latest on real estate, architecture, and design, straight from New York City.
