Bank of America, near the colony of. 5bn $8 on subprime mortgage loans - The Guardian

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.

BofA in mortgage Setttlement talks (Wall Street Journal)

Bank of America Corp., after combat requests that he buy certain loans began to potential settlement discussions with some of its largest investors of the mortgage.

The Group of 17 members currently in talks with largest bank nation such as measured by assets includes the Federal Reserve Bank of New York, a company owned by the Government mortgage Freddie Mac, BlackRock Inc. and Allianz are Pacific Investment Management Co. or Pimco.

Reuters CEO Brian Moynihan told BofA was engaging in "at par" combat on mortgage redemption requests.

Approach to the Bank with this group appears to signal a change in tone for Chief Executive Brian Moynihan, which, in November, is committed to participate in the "daily struggle, body to body" on requests for the investor to buy up bad mortgages made before U.S. housing collapse.

Spokesperson for the Bank James Mahoney said the decision to enter into talks with the Group of investors is not incompatible with the previous approach by Mr. Moynihan.

"Our strategy has not changed", he said. "Bank of America and investors, solve these problems quickly in the interests of all." If resolution is a long-term process, or it can be speeded up, say. »

Investors, some of which are acting on behalf of clients, sent a letter October alleging that a unit of Bank of America has not properly 115 trading link service consisting of residential mortgages. It gives the Bank 60 days to respond.

Disclosure of stock of the Bank of America tumbling 4.4% letter on 19 October, as investors grappled with door that the Bank could be overwhelmed with these demands of the investor. The Group has since expanded and now includes 17 investors and 167 treats binding.

Access thousands of non-available free web-based commercial sources. To learn more

"Our clients are of course very pleased that we were able to open this dialogue and we hope to move it in a positive direction," said Kathy Patrick, a lawyer for the holders of bonds. Mrs. Patrick said that initial extension in the period of negotiations will be January 30, but it can of course be extended if discussions are productive. »

The talks could disintegrate, but conversations are an attempt by the Bank to put the question behind him, people familiar with the situation said.

No American Bank is more vulnerable to an array of the policies and financial threat posed by the misfortunes of loans. Bank of America has repurchased requests more than any of his rivals. It services a mortgage every U.S. five, many of them for the acquisition of Bank of America lender program national Financial Corp. in 2008.

"The objective set out Brian is to put the issues behind us as quickly as possible and in the best interests of the shareholders"Bank spokesman, said Mr. Mahoney."Virgin"

Purchase loan mortgage new claims amounted to 12.8 billion at the end of the third quarter, up to 7.5 billion for the quarter of the year - ago in total. The Bank has set aside $ 4.4 billion in reserves for these restore attempts.

M. Moynihan said analysts on 19 October that he was not interested by a lump sum payment large obliterating the question of redemption.

"We want to put this behind us to make us feel that good", he said. "We will make sure we are going to pay when due, but not just to make a regulation to move the issue behind us."

-Ruth Simon
has contributed to this article.

Write toDan Fitzpatrick dan.fitzpatrick@wsj.com