Bank of America to Pay Record Settlement Fee for Bad Mortgages
August 20, 2014 · Posted by Alex Kogan
In the largest-ever settlement between the U.S. government and a single company, Bank of America is expected to pay $17 billion in fees to settle accusations surrounding the sale of toxic mortgages before the financial collapse of 2008.
The settlement comes after a judge ruled against the bank in a separate case, ordering the company to shell out nearly $1.7 billion for selling defective loans. That ruling undermined the bank’s legal standing and negotiating leverage, rendering it costly and likely futile to fight take the other charges to court.
Bank of America has expended massive amounts of effort and money in recent years attempting to settle a host of legal woes lingering from the Great Recession. Wall Street Journal reports:
“The settlement is also a fresh reminder for the bank of the costs of its 2008 purchase of Countrywide Financial Corp., a deal that rocketed Bank of America into a major player in mortgages but also hamstrung it with exotic loans. Most of the mortgage securities made in the years immediately before the financial crisis, and now credited to Bank of America, came from Countrywide.”
The settlement amounts to three years' worth of profit for Bank of America.