Register or Sign in        Email This Page     Link To This Page    
Visit MND at MBA in NYC!
33,877
# of User Comments
 

Send Article via Email

REGISTERED USERS (Free!):
Can forward to 6 email addresses at a time. Register or Login

Registered users also get the additional advantage of Co-branded Emails and Landing Pages. Learn more about these features.

Your Name: 
Your Email: 
I want to forward this to
(Enter Email Address Below) :
Include a Personal Message (optional)

Please add 6 and 8 and type the answer here:
Leave this field blank.
Email Preview Below:
This feature is now 100% free. Learn More About Co-branded Email and our other Co-branded Services.
 
This email was sent to you by:
Harry Chriest |
Mortgage News Daily

Message:   YOUR MESSAGE HERE
Email alerts, such as this one, are a free service provided by Mortgage News Daily. If you would like to receive an alert when important news breaks please register to join our community.
Bank of America to Pay Fannie Mae $3.6B to Resolve Repurchase Issues
Posted to: MND NewsWire
Monday, January 07, 2013 9:10 AM

Forward this email:  Send a copy of this story to someone you know that may want to read it.

Bank of America has reached agreement on yet another outstanding legal matter involving defaulted mortgages, this time with Fannie Mae.  This agreement covers current and future repurchase obligations on loans with aggregate unpaid principal balances of $297 billion.  Under the agreement the Bank will repurchase 30,000 mortgages loans originated between January 1, 2000 and December 31, 2008 and will make a cash payment to Fannie Mae of $3.55 billion on the repurchase agreements and an additional $1.3 billion to address servicing issues.  

Fannie Mae said in a statement this morning that the loans to be repurchased had the potential to cause it significant future losses.  The bank will pay par plus accrued interest for a total of approximately $6.75 billion over and above the cash payment.  Fannie Mae said this resolution will result in a substantial decrease in its outstanding repurchase requests in the first quarter of 2013.

As part of the agreement Fannie Mae has approved the bank's request to transfer servicing rights of close to one million loans to specialty services.  Fannie Mae said this approval is consistent with its strategy to utilize specialized loss mitigation capabilities to reduce credit losses on high risk loans.

The bank remains liable for repurchase obligations arising out of specified excluded defects and certain unresolved servicing and indemnification issues as well as for some obligations related to mortgage insurance.

"A favorable resolution of this long-standing dispute between Fannie Mae and Bank of America is in the best interest of taxpayers," said Bradley Lerman, Executive Vice President and General Counsel of Fannie Mae.  "Fannie Mae has diligently pursued repurchases on loans that did not meet our standards at the time of origination, and we are pleased to have reached an appropriate agreement to collect on these repurchase requests."

The agreement required approval of the Fannie Mae's conservator, the Federal Housing Finance Agency (FHFA).  Edward J. DeMarco, Acting Director of FHFA said  "This is a major step forward in resolving issues from the past and providing greater certainty in the marketplace, which remain critical FHFA goals as conservator.  I am pleased with the resolution achieved and thank everyone involved for their efforts."

According to a statement released by Bank of America, the loans involved were originated by Countrywide Financial Corporation which the bank acquired in 2008 and by the bank itself. The loans had an original principal balances totaling 1.4 trillion and the unresolved claims by Fannie Mae for alleged breaches of selling representations and warranties totaled $11.2 billion of unpaid principal balances as of September 30, 2012.  Payments required by the agreement are expected to be covered by the Bank's existing reserves and an additional $2.5 billion (pretax) in representations and warranties provision recorded in the fourth quarter of 2012.  The bank said that the actions described above are expected to reduce its pretax income by approximately $2.7 billion in the fourth quarter of 2012.

Bank of America also announced that it had signed definitive agreements with two different counterparties to sell the servicing rights on approximately two million residential mortgage loans serviced for Fannie Mae, Freddie Mac, Ginnie Mae, and private label securitizations, with an aggregate unpaid principal balance of approximately $306 billion.   Approximately 232,000 of the loans are classified as 60+ day delinquent.

 "As we enter 2013, we sharpen our focus on serving our three customer groups and helping to move the economy forward," said Bank of America Chief Executive Officer Brian Moynihan. "Together, these agreements are a significant step in resolving our remaining legacy mortgage issues, further streamlining and simplifying the company and reducing expenses over time."




More from MND:

 

If you would like to opt-out of receiving email forwards from this person please click here to remove your email address.

Forward this email:  Send a copy of this story to someone you know that may want to read it.

 

More From MND

Mortgage Rates:
  • 30 Yr FRM 4.13%
  • |
  • 15 Yr FRM 3.28%
  • |
  • Jumbo 30 Year Fixed 4.01%
MBS Prices:
  • 30YR FNMA 4.5 107-30 (-0-01)
  • |
  • 30YR FNMA 5.0 110-09 (0-07)
  • |
  • 30YR FNMA 5.5 111-07 (0-01)
Recent Housing Data:
  • Mortgage Apps -2.68%
  • |
  • Refinance Index -3.98%
  • |
  • FHFA Home Price Index 0.67%