BofA Agrees to $10B Fannie Mae Settlement Over Shoddy Mortgages

Bank of America has agreed to pay more than $10 billion to Fannie Mae to settle claims related to shoddy mortgages sold largely by Countrywide Financial during the subprime housing boom.

BofA, which acquired Countrywide in 2008, said it agreed to buy back $6.75 billion in residential mortgage loans sold to Fannie Mae and pay the housing finance giant an additional $3.6 billion in cash.

During the housing boom, banks sold investors bundles of mortgages that were shoddier than promised, according to lawsuits the federal government filed. Now, BofA is resolving the claims against it from Fannie Mae.

Fannie Mae and Freddie Mac have said the lenders misrepresented the quality of the loans and have been trying to get lenders to pay up for bad loans.

The mortgages were sold to Fannie Mae from 2000 through 2008.