Source: CNN Money
Bank of America has reached a $10.3 billion settlement with Fannie Mae to deal with questionable home loans it sold to the government-backed mortgage financer during the housing bubble.
BofA (BAC, Fortune 500) will pay $3.55 billion in cash to Fannie as part of the deal. It will also repurchase 30,000 questionable mortgages that are likely to produce losses, paying Fannie $6.75 billion for the loans. The loans had been bundled into mortgage-backed securities, and then were bought and guaranteed by Fannie Mae.
The purchase of bad home loans by Fannie Mae led to massive losses, a government takeover in 2008 and a $116 billion bailout to keep it functioning as a major source of home loans.
The loans were originated between 2000 and 2008 byCountrywide Financial, a leading mortgage and subprime home loan lender that BoA purchased for $4 billion in 2008. The loans covered by the settlement had an original value of $1.4 trillion.
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