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Bank of America reaches agreement over Countrywide loans

Bank of America said Monday it has reached an agreement with Fannie Mae and Freddie Mac over bad residential mortgage loans sold to them by Countrywide Financial Corp.

As part of the agreement, Bank of America made a $1.28 billion cash payment to Freddie Mac and a $1.34 billion payment to Fannie Mae Friday.

Bank of America also expects to take a $3 billion provision in the fourth quarter related to the claims.

Charlotte-based Bank of America bought Countrywide in 2008.

The bank said the agreement will put to rest any mortgage repurchase and make-whole claims pertaining to loans sold by Countrywide to either of the government-sponsored entities, including 787,000 loans to Freddie Mac with an unpaid balance of $127 billion and 12,045 loans to Fannie Mae with $2.7 billion of unpaid principal balance.

The agreement also resolves specific claims and extends the cure period for claims related to missing documentation on an additional 5,760 Countrywide loans with approximately $1.3 billion of unpaid principal balance.

“These actions resolve substantial legacy issues in the best interest of our shareholders,” Bank of America President and CEO Brian Moynihan said in a statement. “Our goals remain the same: Put these issues behind us, focus on serving customers and clients and continue to help distressed homeowners facing difficult times.”

Caitlin Coakley can be reached at caitlin.coakley@mecktimes.com.

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