Fannie Mae and Freddie Mac, the U.S. government mortgage lenders, accepted US$2.8-billion from Bank of America to settle claims of the bank providing faulty loans.
Fannie Mae and Freddie Mac, the U.S. government mortgage lenders, accepted US$2.8-billion from Bank of America to settle claims of the bank providing faulty loans.
The cost to Bank of America was less significant than what some investors expected, according to the Washington Post, and the bank’s stock increased by 6.4 per cent on Monday January 3 after the news was released.
The settlement helps Bank of America avoid “a doomsday scenario,” analyst Paul Miller of FBR Capital Markets told the Post, but Fannie Mae can still pursue additional claims against the bank whereas Freddie Mac has now closed any more potential claims.
Fannie spokesperson Janis Smith called the deal a “fair and responsible resolution,” though others cite it as a “gift” to the bank because the losses will now be incurred on the government mortgage lenders.
