Bank of America to Settle Poor Mortgage Security Deal for $8.5 Billion: Source
Bank of America (NYSE: BAC) is close to settling a deal with investors worth almost $8.5 billion, as yet another bank suffers a loss related to mortgage-backed securities that performed poorly.
First reported by the Wall Street Journal, the deal would be historical in size and scope. Mortgage companies and banks have come under increasing scrutiny for playing contributing roles in the mortgage meltdown.
Bank of America still faces a difficult road since the events of 2008. Its acquisition of Countrywide Financial has saddled the bank's balance sheet with bad loans, and new financial regulations restrict some of its businesses.
According to a Reuters report, "The deal could embolden investors holding mortgage-backed securities filled with now-toxic home loans to pursue claims against other large mortgage lenders such as Wells Fargo & Co and JPMorgan Chase & Co, analysts said."
The deal would have to be approved by Bank of America's board.
A person familiar with the matter told The Journal that "Bank of America's possible settlement extends beyond the case brought by the initial group of investors, and could resolve "significant parts" of its exposure to repurchase claims from private investors"
Bank of America is the nation's largest bank by assets.
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