Bank of America Settles with Freddie and Fannie

Bank of America has settled with Freddie Mac and Fannie Mae for $2.8 billion to silence claims that the bank sold them faulty loans. Investors are typically entitled to repayment by the lenders if the loans were sold on the basis of false assurances. Since Bank of America’s acquisition Countrywide Financial, they have been particularly exposed in this area. Bank of America claimed the $1.3 billion payment to Freddie Mac settles all claims on 787,000 mortgages that valued at $127 billion. The $1.5 billion settlement with Fannie Mae however only claims to resolve 12,045 loans with unpaid balances of $2.7 billion. It partially resolves an additional 5,760 loans with unpaid balances of $1.3 billion therefore leaving Bank of America open to a future claim from Fannie Mae.