BofA settles reps and warrants issue with Freddie Mac for $404M
Deal resolves mortgage issues from 2000-2009
Freddie Mac managed to get another reps and warrants case against a mega lender behind it on Monday, announcing a $404 million deal with Bank of America (BAC) over misrepresentations the lender allegedly made on loans sold off to the government-sponsored enterprise.
Freddie Mac announced the deal this morning.
As part of the agreement, Bank of America will pay Freddie Mac $404 million.
Freddie also will release the bank from existing and future buyback obligations stemming from 716,000 questionable loans originated between 2000 and 2009. The payment covers past losses on the loans and future rescissions and mortgage cancellations.
"We are pleased to have reached this agreement with Bank of America, which now allows both companies to move forward," said Freddie Mac CEO Donald H. Layton. "We continue to make very good progress in recovering funds that are due to the American taxpayer, as well as resolving Freddie Mac's legacy repurchase issues."
The deal follows several other agreements the GSEs and FHFA cut with big banks to resolve outstanding mortgage issues. Analysts have long anticipated a slew of settlements before the end of the year, allowing the GSEs to get reps and warrants issues behind them.
Not long ago, SunTrust reached a deal with Fannie and Freddie over mortgage purchase requests, resulting in a $63 million added charge to the company's repurchase reserve.
Then there's JPMorgan Chase's (JPM) deal to pay a total of $5.1 billion to resolve outstanding mortgage issues with the Federal Housing Finance Agency and the two government-sponsored enterprises, Fannie Mae and Freddie Mac.