Bank of America has agreed to settle claims brought against it by the United States. The charges claimed against Bank of America include allegations that the corporation, and its subsidiary, Countrywide Financial Corp., improperly sold the government entity, Fannie Mae, mortgages which later became delinquent.
The issue began in 2008 before the financial crisis when Bank of America bought Countrywide, a lender known for granting precarious loans. Bank of America was first applauded for this as they were viewed as eliminating a negative actor from the mortgage market. However, things went sour when Bank of America began selling off the risky defaulted loans it had acquired from Countrywide to Fannie Mae in order to make a profit. Loans which Fannie Mae says never should have been sold due to their risky and insecure nature.
The settlement has Bank of America paying $3.6 billion to buy back $6.75 billion of loans which Countrywide sold to Fannie Mae from January of 2000 through December of 2008.
To read the Press Release from Fannie Mae, click here.
To read the settlement, click here.