BofA Reaches Settlement With FHFA, NYAG

(RTTNews) - Bank of America Corp. (BAC) said Wednesday that it has reached a settlement with the Federal Housing Finance Agency as conservator of Fannie Mae and Freddie Mac to resolve all of the agency's residential mortgage-backed securities litigation with Bank of America, as well as other legacy contract claims.

The FHFA settlement resolves four lawsuits the agency filed against Bank of America, Countrywide, and Merrill Lynch entities beginning in September 2011, alleging they falsely represented that the underlying mortgage loans complied with certain standards. About $57.5 billion of private-label RMBS purchased by Fannie Mae and Freddie Mac are covered by the settlement.

Under terms of the settlement, Bank of America will make cash payments totaling about $6.3 billion to Fannie Mae and Freddie Mac. In addition, Bank of America will purchase certain RMBS at fair market value of about $3.2 billion.

In return, FHFA's pending lawsuits will be dismissed with prejudice and Bank of America and its affiliates will be released from all securities law and fraud claims, as well as certain other claims related to the private-label RMBS in dispute.

Bank of America expects the FHFA settlement to reduce first quarter 2014 income by about $3.7 billion (pretax), or $0.21 per share (after tax).

Bank of America is scheduled to report first quarter results on April 16.

Bank of America also said that it entered into an agreement to resolve a 2010 lawsuit brought by the New York Attorney General against Bank of America and certain former executives, alleging a failure to disclose losses at Merrill Lynch prior to the company's acquisition of Merrill Lynch.

The company said it has agreed to pay $15 million to settle the NYAG's claims against it, reflecting the NYAG's cost of investigation and litigation, and to adopt certain corporate governance changes.