BoA to settle with Fannie Mae, sell mortgage assets

NEW YORK: Bank of America on Monday announced roughly $11.6 billion of settlements with mortgage finance company Fannie Mae and a $1.8 billion sale of collection rights on home loans, in a series of deals meant to help the bank move past its disastrous 2008 purchase of Countrywide Financial.

The settlements and transactions and other charges will result in Bank of America posting only a small profit for 2012's fourth quarter. The bank is due to report results on January 17. Bank of America is paying $3.6 billion to Fannie Mae and buying back $6.75 billion of bad loans from the mortgage company to clear up all claims that Fannie Mae had made against the bank.

Fannie Mae and its sibling, Freddie Mac, have been pushing banks to buy back loans they sold to the two companies that never should have been sold to them because the loans did not meet the companies' criteria for purchasing.

Bank of America said most of the settlement would be covered by reserves, and another $2.5 billion, before taxes, that it set aside in the fourth quarter. A separate settlement over foreclosure delays will result in Bank of America paying $1.3 billion to Fannie Mae, the mortgage company said.

US BANKS TO PAY $8.5 BILLION

Ten of the largest US mortgage servicers will pay $8.5 billion under an agreement that will end case-by-case reviews of foreclosure-abuse claims stemming from a 2011 deal with regulators. Companies including JPMorgan, Bank of America and Citigroup must provide $5.2 billion in mortgage assistance and $3.3 billion in direct payments to wronged borrowers.