BofA said to near U.S. mortgage accord after raising offer
BANK OF AMERICA CEO Brian T. Moynihan has agreed to bank payments of more than $55 billion in fines and other expenses related to the company's role in the financial crisis, and more potentially is to come as a result of continuing talks with the U.S. Justice Department.
NEW YORK - Bank of America Corp. is nearing a settlement with the U.S. Justice Department after raising its proposed offer to resolve probes into its sale of mortgage-backed bonds in the run-up to the financial crisis, according to people familiar with the talks.
Representatives from the bank were at the Justice Department today to discuss terms, and an accord could be reached as soon as this week, said two people, who asked not to be named because the negotiations are private. Potential terms have ranged from $13 billion to $17 billion, according to one of the people.
An agreement could cement Bank of America’s status as the firm punished hardest for faulty mortgage practices that spurred the housing bubble and collapse. The company, under CEO Brian T. Moynihan, has booked more than $55 billion in expenses tied to home loans, mostly linked to the disastrous 2008 takeover of subprime lender Countrywide Financial Corp.
In a separate matter, the bank, based in Charlotte, N.C., also was ordered today to pay $1.3 billion in penalties for defective mortgage loans that Countrywide sold to Fannie Mae and Freddie Mac before the crisis.
Bank of America rose 23 cents to $15.57 at 3:09 p.m. in New York and earlier climbed as much as 2.1 percent, the biggest intraday advance in almost a month.
Lawrence Grayson, a Bank of America spokesman, and the Justice Deparment’s Ellen Canale declined to comment on the negotiations.
Discussions with the federal government broke down in June after the two sides failed to agree on how much the bank should pay, people familiar with the negotiations have said. The government started to prepare a lawsuit against the bank before talks resumed earlier this month, they said.
Negotiations have centered on faulty loans the company inherited from Countrywide and Merrill Lynch & Co., which it purchased in 2008. The discussions include how much money will be paid in cash and how much in consumer relief.
Associate Attorney General Tony West, who has been leading the negotiations since March, was dissatisfied with the bank’s previous offer to pay about $13 billion, which included at least $5 billion in consumer relief, two people have said.
Countrywide, acquired under Moynihan’s predecessor, has been blamed by lawmakers and regulators for using lax underwriting standards and predatory lending that fueled its ascent to the biggest U.S. mortgage lender before its collapse and sale to Bank of America.
The amount of any settlement would come on top of the $9.5 billion the bank agreed to pay in March to resolve Federal Housing Finance Agency claims.
Patricia Hurtado in federal court in Manhattan assisted with this report.