Posted on Friday, January 7, 2011
Fannie Mae and Freddie Mac have reached another agreement with a lender to cover repurchase claims from alleged faulty underwriting standards in origination.
Bank of America (BofA) announced Monday that it paid a nearly $3 billion settlement to Fannie Mae and Freddie Mac on the last day of 2010 to cover repurchase claims from the two GSEs.
The agreement with Fannie Mae resolves outstanding claims received for certain loans made by Countrywide
Financial Corporation, which BofA purchased in 2008. The agreement with Freddie Mac covers both outstanding and potential repurchase claims for loans sold to the company by Countrywide through 2008.
The agreement with Freddie Mac covers more than 780,000 loans with a total unpaid principal balance of $127 billion. Bank of America made a cash payment of $1.28 billion to Freddie Mac on December 31, 2010.
Fannie Mae received a cash payment totaling $1.34 billion from the Charlotte, North Carolina-based bank on the same day to cover outstanding repurchase requests on 12,045 loans with an unpaid principal balance of $3.9 billion. Fannie says the agreement with BofA addresses approximately 44 percent of the GSE’s $7.7 billion in total buybacks outstanding.
“These actions resolve substantial legacy issues in the best interest of our shareholders,” said Bank of America president and CEO Brian Moynihan. “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.”
By: Joy Leopold