Bank of America is paying $2.8 billion to Fannie Mae and Freddie Mac to repurchase soured mortgages, The Wall Street Journal reports. The bank, which is being sued by its private investors, may have to pay $10-15 billion to buy back the mortgages that were sold on the open market because they did not conform to the underwriting guidelines of Fannie and Freddie. The agreement includes a cash payment of $1.28 billion to Freddie and $1.52 billion to Fannie, while $2.7 billion in put-back claims will remain mainly on mortgages that Bank of America, rather than Countrywide, originated and sold to government-sponsored enterprises. The agreement with Freddie Mac will resolve outstanding and potential future repurchase claims, while the agreement with Fannie Mae covers only outstanding claims.
Click here for the story from The Wall Street Journal.
Click here for additional coverage from Reuters.