Bank of America (BAC) may end up paying $5 billion to $8 billion to settle a mortgage lawsuit filed by the federal government after rival JPMorgan Chase (JPM) took a major multibillion dollar hit of its own, Bloomberg reported.
Bank of America had about $57 billion in mortgage-backed securities cited by a Federal Housing Finance Agency lawsuit, compared with about $33 billion tied to JPMorgan Chase & Co.’s suit, which was settled last week for $4 billion, Fitch analysts wrote in a note today.
Lenders facing FHFA claims may have to boost litigation reserves based upon the JPMorgan deal, Fitch said. Charlotte, North Carolina-based Bank of America’s settlement costs probably wouldn’t affect the lender’s credit grades, Fitch said.
