Bank of America to pay Fannie Mae $10.3 billion over bad loans

The agreement does not end a lawsuit filed by the federal government over the cost to taxpayers of mortgages that failed, many made by the now-defunct Countrywide.

By Teresa at MSN Real Estate Jan 7, 2013 1:59PM

© Radius Images/JupiterimagesAlong with being one of 10 banks that agreed to pay $8.5 billion to compensate homeowners for wrongful foreclosures, Bank of America also reached an agreement this week to pay $10.3 billion to Fannie Mae over loans that went bad during the housing crisis.

 

The $10.3 billion settlement with Fannie was mostly over loans originated by Countrywide Financial, which was acquired by Bank of America. We’ve written previously about Countrywide’s Hustle program, which removed many of the checks and balances in its loan underwriting.

 

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"A favorable resolution of this longstanding dispute between Fannie Mae and Bank of America is in the best interest of taxpayers," Bradley Lerman, executive vice president and general counsel of Fannie Mae, said in a news release. "Fannie Mae has diligently pursued repurchases on loans that did not meet our standards at the time of origination, and we are pleased to have reached an appropriate agreement to collect on these repurchase requests."

 

The settlement does not end a Justice Department suit against Bank of America accusing the lender and the former Countrywide of costing taxpayers $1 billion by selling bad mortgages to Fannie Mae and Freddie Mac.

"Our lawsuit against Bank of America for its allegedly reckless and fraudulent lending practices is unaffected and is in fact expressly carved out from the settlement that the parties reached today," Ellen Davis, the department's chief public information officer, told Reuters.

The news service explains:

Fannie Mae and sibling Freddie Mac essentially buy mortgages from banks and package them into bonds for investors. But during the mortgage boom, banks sold loans to the two companies that Fannie Mae and Freddie Mac say should never have been because, for example, borrowers had misstated their income. The two mortgage finance companies are pushing banks to buy back the loans.

The agreement calls for Bank of America to pay Fannie Mae $3.6 billion in cash and repurchase about 30,000 loans at a cost of $6.75 billion. Bank of America reached a settlement with Freddie Mac in 2011.

"As we enter 2013, we sharpen our focus on serving our three customer groups and helping to move the economy forward," Bank of America Chief Executive Brian Moynihan said in a news release. "Together, these agreements are a significant step in resolving our remaining legacy mortgage issues, further streamlining and simplifying the company and reducing expenses over time."

 

 
34Comments
Jan 12, 2013 5:28PM
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I bought one of those foreclosed homes at less than half of what it sold for the first time. I had chances to buy during the boom but I stepped back and said the houses are not worth what they are selling for. I waited and waited then the bottom fell out because people chose to buy homes at inflated prices. My luck was with me for once. Should I lose this home it will be my fault. The bank and I are gambling things will stay the same or get better. If you signed the contract you are obligated to meet the contract requirements, same as the bank. If you cannot then you have two choices, get foreclosed or file bankruptcy where you have the chance of maybe saving your home. Unless you have video of them putting a gun to your head telling you to sign then your loss is your fault. Had you gained it would be your profit and you would be bragging how smart your investment was. Suck it up and move on, you had your chance and chance was against you.
Jan 12, 2013 2:49PM
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Why your at it release the assets you have frozen from the law abiding gun manufacturer you are illegally holding. 
B of A is immensely corrupt I was a customer and NEVER will be again.

 Profits before People is the M.O.
Jan 12, 2013 2:16PM
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Okay - this is a bit off subject, but I paid PMI  (private mortgage insurance) in my mortgage payment with another lender. So I'm wondering this - if I had lost  my home, who would the private mortgage insurance have paid out to?  Also, didn't the people paying the mortgages also pay PMI as I did?  If so, what happened to that money?"
Jan 12, 2013 1:43PM
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Thank goodness, our house is paid off!   We bought our house in 2001 and paid if off in 6 2012.  It took us eleven years, but will sell it in one to one and half years from now.  We will live overseas with my husband family.  Of course, we will have our own house there completey paid.  We will have to buy some furnishings tho.  We financed our house through Bank of America, but never missed a payment  and paid more than the payment each month.  That way, we paid it off early.  We both worked in our professions, no kids and only one dog.  We were able to save, have nice recreation in our local area and travel here in the U.S. and overseas.  How did we do it?  We bought a house that was fourteen years old.  It was like brand new as the people who lived in it before us took excellent care of it.  We bought used furniture and some furniture like a stove and frig plus patio furniture were already in it and the house included that stuff.  We always lived below our means all our married life.  We met each other in collage and worked our way through collage without the help of a loan.  My husband got a scholorship.  We puller our own weight!
Jan 12, 2013 1:33PM
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i want my credit report to reflect and be fixed by B of A aka: Countrywide for their wrong doing and for screwing up my future ; losing my home ; and having to file bankrutpcy because of it and now I'm being told hey if your still in that home we can help . Great wish I would have had this kind of help when I was losing my home and Countrywide refused to do anything because of their financing tactics . My husband & I tried liasons through Countrywide / couselors ; everything and it came down to us losing our home and nothing to show for it . Bought home in 1998 and lost home in 2009, Thank you Countrywide/Bank of America for such fond memories of being a first time home owner . Now why dont you really do something and fix my credit report and allow me to put my kids in a home .
Jan 12, 2013 12:09PM
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  After screwing up our credit by put our Bank account over drawn by letting their credit card company draw $100.00, after the law suit my wife got back $4.90 for all of the illegally high interest rate for their over drawing both of these account, and only the credit card company paid this $4.90 for hundreds of dollars of illegal interest charges.

 So as some one posted what is going to make these CEO's pay for their criminal activity, or is this like the "Fast and Furious" activity done by the present administration, who along with false numbers and all the shooting done by mentally ill people in our schools when the NCIC are not doing their job as a Federal Agency on the called for by Law on the books for a complete back ground check on gun buyers?

 Political NO just the facts, and no names have been changed to protect those who are not innocent of wrong doing.

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without jail sentences for top executives commiting crimes, there is no incentive to improve behavior. If the only thing that happens is a corporate fine, Why change?? The top dogs even keep their bonuses.
Jan 12, 2013 10:16AM
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What about us, that didn't get a loan through Freddie Mac or Fannie Mae, but did through Country Wide. Our loans were approved for more than our places were worth, but since we didn't go with Freddie Mac or Fannie Mae, we get no help. We have been paying 10 years on our house and still the loan is more than the place is worth. And I have been paying 200.00 a month more.
Jan 12, 2013 9:03AM
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BOA should have been left to fail from their own greed!

Jan 12, 2013 8:46AM
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How can they afford to pay that much?
Jan 12, 2013 8:33AM
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way to go Eric Holder Obama needed your help to correct some of the illegal dealings with this country.
Jan 12, 2013 8:31AM
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Corporate banks are among the greatest THREATS to America.

Trust-bust them all.

Abolish ALL corporations before corporations overthrow America.

Bring back small business.

Jan 12, 2013 8:27AM
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People---People---get with the program!!!  The politicians are in the pocket(s) of the banks--mortgage companies and stock brokerage houses.  The general public couldn't be bothered to get off their VERY PLUMP  bums and actually participate in the democracy they live it.

 

Its simply one of the outcomes of the---- me---me---me  generation, well one of these days when the pop hits the fa they will be in for a rude awakening. obama and his lackeys at the justicedept.t. have NO INTENTION of putting of the executives in prison, after all, if they (the execs.) started telling tales it probably would be an embarrassment (at best) for the administration.

Jan 12, 2013 6:56AM
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We ask for help before I lost my job 3 years later after 18 different case workers 30 different packets of which at least 15 of them were never received, the saga continues, I still do not know how I ever got involved with Bank Of thieves!  As of today my bags are pack and we are officially homeless not because they have foreclosed or thrown us out ,I can not take the lies and deception anymore! How those m fers sleep at night  baffles me! I will never be a home owner again! Good Luck to those of you who choose to fight the fight!
Jan 12, 2013 6:30AM
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"Steal a little and they put you in jail, steal a lot and they make you a king" Bob Dylan.  Why is nobody going to jail? Predatory lending sounds very bad, yet nobody goes to jail. What is to stop this predatory behavior if nobody is punished for the conspiracy?
Jan 12, 2013 5:55AM
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Shakespeare should have included bankers and politicians in his famous line.
Jan 12, 2013 5:49AM
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Many buyers who entered into these subprime mortgages knew very well they could not afford these homes. The banks knew they could not afford these homes. The govt and fannie and freddy were also willing accomplices. I see perpetrators not victims. The only victims were the people who played by the rules and got stuck with the $ 700 billion Tarp1 and the $ 800 billion Tarp2 tabs.
Jan 12, 2013 5:37AM
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Bank of America is getting off with a slap on the wrist. The number of people they have harmed with their "profit first" mentality is staggering. We are one of the families suffering from their corporate fraud, and I am planning on submitting a claim to them. We are the people that modification was supposed to help: didn't buy too much house but lost jobs due to the recession and nothing else. Applied well before the situation became dire; we were still maing the payment, but we only had about a year and a half of expenses saved.

 

Bank of America told us to stop paying the mortgage or they couldn't help. We didn't feel right about that, so we struggled through another year untilw e couldn't trim anymore and couldn't pay any more and our only option was credit cards. Filed for a modification and were denied twice for no reason (the second time we were denied in writing after being told that we were approved over the phone). Now Bank of America is forcing me to submit 80 pages of application to short sell my house, and they have denied that also, based on spurious claims that they did not get all the paperwork (which I of course have a fax record of sending and copies). Pretty soon we are going to leave the keys on the counter and walk away, literally.

 

The end result is that we are going to lose the house one way or another, all because they refused to work with us when things weren't so bad. Now that we can afford the mortgage again, we are so far behind that we can't catch up, so we have to get out anyway.

 

And all they get is a slap on the wrist. I don't care if my share of the settlement is $250. I want some sort of acknowledgment that they were wrong, that their practices in business are harmful.

Jan 12, 2013 5:31AM
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Look at all that money B of A is paying. Billions! Does that give you any indication of just how much money banks make? Now tell me- with that kind of revenue, why did the government need to bail any of them out?: The first few years of a fully amortized mortgage is so heavy with interest, and before the meltdown occurred this country experienced a record number of new mortgage originations. The banks were raking it in hand over fist. So, the government bailed them out, with money from the taxpayers, why??? The first year rate of return on a fully amortized mortgage at that time was over 500% (yes, five hundred percent.) Do the math: compare the percentage of interest paid to that of the principal. Again, we bailed THEM out? Pay up, B of A. My question now is: how are those billions being allocated?
Jan 12, 2013 4:10AM
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HOW MUCH ARE THE  WRONGFUL FORECLOSED PEOPLE GETTING BACK?
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