Bank of America is close to settle with investors to wire sub-prime loans that went sour. Photography: Chuck Burton/AP.Bank of America (BoA) is close to finalizing an agreement to pay $8. 5bn (£ 5 5.3) to settle claims by a group of investors that the Bank sold mortgage-backed securities of poor quality which went sour when the housing market has stagnated, according to a person familiar with the settlement talks.
The Bank in North Carolina continues talks later Tuesday with the group, which includes the Federal Reserve Bank of New York, Pimco Investment Management, holders of most of the world and of Blackrock financial management. It is expected to announce an agreement as early as Wednesday, the person said on condition of anonymity because the case was still in development.
The agreement comes eight months after the Group fired a letter to Bank of America, demanding that it buy $47bn mortgage Countrywide unit sold to them in the form of bonds. Investors argued the practice of this Countrywide modify loans have faulty paperwork or those written outside normal underwriting standards breached agreements with investors. By continuing bad loans of service rather than accelerate the seizure, the group said gravi Countrywide maintenance of fees, get rich at the expense of investors. The New York Fed is involved because he has taken over the assets held by American International Group, which has hesitated under the weight of bad mortgages that it insured.
Bank of America, which has paid $4 Countrywide in 2008, rejected suggestions that his treatment of loan modifications and other efforts to prevent the foreclosure have violated the terms of mortgage-backed securities that hold investors. In November, CEO Brian Moynihan said that it is in the daily "naked" with the requirements of investors.
But the combined effect of the agreement of the country, the mortgage crisis and the overhang risk loans bitter were a drain on bottom line and stock, finally prompting a reversal in the strategy of BoA. Since the beginning of the year, the Bank has hit large colonies with several investors. In January, the lender paid more than $2 to settle claims of redemption on mortgage loans sold to Fannie Mae and Freddie Mac. And, in April, the Bank has agreed to pay more than $1 to assured Guaranty, the insurer also urged the Bank to the redemption of mortgage loans of poor quality. If approved, the last colony will address a significant remaining slice of the claim for Bank of America mortgage redemption risk.
A spokesman for Bank of America could not immediately be reached for comment.
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