Bank of America, Freddie Mac reach an agreement
Bank of America has reached a $404 million mortgage repurchase agreement with Freddie Mac on Monday morning, which covers outstanding as well as potential residential mortgage claims through the end of 2009 and will make-whole claims tied to loans sold to Freddie Mac between January 1, 2000 and December 31, 2009.
Additionally, the settlement outlines that Bank of America will compensate Freddie Mac for specific past loan losses and potential future losses tied to denials, rescissions, as well as cancellations of mortgage insurance.
This settlement agreement is another in the long line of agreements between banks and Fannie/Freddie surrounding loans that were illegal, fraudulent, or contained faulty origination documents, a substantial portion of which surrounds the robosignature debacle that poisoned the entire chain of title.
This closes a major chapter in BoA history
So will this hurt Bank of America? Of course not, and not because $404M is a drop in the bucket, but because this settlement is fully covered by existing legal reserves. In a statement, Bank of America notes this settlement resolves their outstanding issues between them and Fannie Mae and Freddie Mac, also covering their liabilities for Countrywide which they acquired in 2008. This was the primary point made in their short statement, focusing on the resolution of “all outstanding and potential representations and warranties claims on whole loans sold by legacy Bank of America and Countrywide to Fannie Mae and Freddie Mac.”
“We are pleased to have reached this agreement with Bank of America, which now allows both companies to move forward,” Freddie Mac CEO Donald Layton said in a statement. “We continue to make very good progress in recovering funds that are due to the American taxpayer, as well as resolving Freddie Mac’s legacy repurchase issues.”