BofA agrees to $8.5bn settlement

BofA agrees to $8.5bn settlement

Bank of America Corp, the biggest US bank, agreed to pay $8.5 billion to resolve claims over soured mortgages after bondholders including BlackRock Inc demanded refunds.

The settlement will contribute to a second-quarter loss of $8.6 billion to $9.1 billion, or 88 cents to 93 cents a share, the Charlotte, North Carolina-based bank said on Wednesday in a statement. Bank of America also said it's adding $5.5 billion to a liability reserve for future loan-repurchase demands and will record $6.4 billion in other charges including legal costs and a writedown of mortgageunit goodwill.

"This is progress in that it puts some parameters around what the total loss will be," said Marty Mosby, a Nashville, Tennessee-based analyst at Guggenheim Securities LLC, which manages more than $100 billion, including Bank of America shares.

"It's not a great thing to pay this much, but it's not the worst-case scenario either." Investors, which also include Pacific Investment Management Co and the Federal Reserve Bank of New York, demanded in October that Bank of America repurchase home loans that had been packaged into bonds by Countrywide Financial Corp, which it acquired in 2008.

The settlement covers 530 mortgage trusts with an original loan balance of $424 billion, the bank said. The company's board met in Tuesday to discuss the settlement, which still needs court approval.

source: timesofindia.com