The agency sued 18 financial institutions in 2011 over their sales of mortgage securities to Fannie and Freddie. It alleges many banks falsely represented the mortgage loans behind the securities. These soured after the housing bubble burst and lost billions in value.
Bank of America said that it will make cash payments of roughly $6.3 billion and also purchase securities from Fannie and Freddie worth more than $3 billion. It is one of several banks to settle with the FHFA, which announced the agreement Wednesday.
Fannie and Freddie donít directly make loans to borrowers. They buy mortgages from lenders, package them as bonds, guarantee them against default and sell them to investors. That helps make loans available and gives Fannie and Freddie a huge role in the housing market. They own or guarantee about half of all U.S. mortgages.
The two were rescued in a taxpayer bailout in 2008 as they sank under the weight of mortgage losses.
Separately, New Yorkís attorney general announced that Bank of America and its former chief executive Kenneth Lewis reached a $25 million settlement to end an investigation into their actions in the 2008 acquisition of Merrill Lynch & Co.
The civil fraud lawsuit accused them of failing to disclose Merrill losses and bonuses before the deal closed. The settlement requires the bank pay $15 million and continue certain corporate governance reforms. Lewis, now 67, is prohibited for three years from serving as an officer or director of a public company. He was ordered to pay $10 million.
The bank acknowledged the settlement in a statement Wednesday, noting the $15 million reflects the attorney generalís cost of investigation and litigation. Last year, Bank of America settled a related class-action shareholder lawsuit for $2.43 billion.
Attorney Bruce Yannett, representing Lewis, said his client relied on experienced legal counsel about disclosures. Yannett said Lewis is proud of his role helping the banking system survive a challenging period and heís pleased to the put case behind him.
Shares of Bank of America Corp. fell 3 cents to close at $17.18 and rose 15 cents in after-hours trading to reach $17.33.
MORE HBJ HEADLINES
Hotel industry supplier Electric Mirror to expand in Everett Facebook ready to test giant drone for Internet service Economy up 2.3%; 1st quarter revised higher Our finance industry has grown too large Procter & Gamble sales dip on softer volume Briefs: Port of Everett awards $15,000 to support tourism
Our new comment system is not supported in IE 7. Please upgrade your browser here.