Bank of America has agreed to pay $9.3 billion to settle crisis-era charges over shoddy mortgage securities sold to the nation’s housing enterprises.
The Federal Housing Finance Agency (FHFA) announced the agreement Wednesday, and the deal covers issues also tied up in Countrywide Financial and Merrill Lynch, which were later purchased by Bank of America.
“This settlement also represents an important step in helping restore stability to our broader mortgage market and moving to bring back the role of private firms in providing mortgage credit. Many potential homeowners will benefit from increasing certainty in the marketplace and that is very much the direction we should be taking,” said FHFA Director Melvin Watt.
The two government-sponsored enterprises were ultimately sunk by losses tied to the subprime mortgage crisis, and had to be rescued by the government in 2008. The housing comeback has allowed the federal government to make up as much in profits from controlling the enterprises as it had to pump into them to keep them afloat.
Of those 18 suits, seven remain outstanding. The FHFA said Wednesday it remained committed to resolving those actions.
"We are pleased that we have resolved this matter with one of our largest seller/servicer customers and counterparties," said Freddie Mac CEO Donald H. Layton. "This settlement is an equitable outcome that allows both Freddie Mac and Bank of America to put these issues behind us and focus on the future."