Bank of America: $60 Billion Loss Could be Incurred, Report Says


Bank of America $60 billion: A report this week says that Bank of America might be penalized $60 billion over lawsuits related to mortgage-backed securities, including 530 mortgage trusts sold by Countrywide.

The Motley Fool website’s Amanda Alix writes that some analysts have speculated that the loss would be attributed to a penalty regarding $108 billion in losses suffered by a group of 22 investors, including BlackRock, PIMCO, and Metlife.

Mark Palmer of BITG research told the Motley Fool that around 56 percent of the “Countrywide MBSes MBIA insured had issues so odious that a lender would be too embarrassed not to repurchase them.” If the percentage was applied to the $108 billion, it would come out to around $60.5 billion, he estimated.

The report comes after a settlement between Bank of America and the 22 investors for $8.5 billion. Some investors have claimed that the bank placed its own interests above others by changing elements of the mortgage-backed securities. It then failed to buy them back, the Fool said.

One analyst told the website that the damage could ultimately cost the bank between $25 billion and $30 billion.

Bank of American acquired Countrywide Financial in 2008. The proposed settlement was met in June 2011, reported Reuters.

The report comes as the Federal Housing Finance Agency (FHFA) withdrew its conditional objection to the bank’s $8.5 billion settlement, reported Fox News.

The court that ordered the withdrawal said the agency did not give a reason for the decision.

A new hearing is slated for May 30 in New York on whether the $8.5 billion settlement should be approved.

The FHFA is in charge of Freddie Mac and Fannie Mae, which back around half of all U.S. loans, as Reuters points out. They were seized by the government in 2008 over massive mortgage losses.

Tags:

  • jims1950

    how about 10 trillion and shut it down

  • James Bruce

    Bank of America is one of the worst banks out there! I hate the bank, and I hope they implode or have to pay more than the 60 billion. [...]

  • http://www.facebook.com/pogroszewski Thomas Ski

    now all we have to do as consumers that bank with them…we all take our money out on the same day! every penny! Bet things would drive them to their knees!

  • http://www.facebook.com/profile.php?id=1420703582 John L. Schindel

    I hope this doesn’t effect executive bonuses!


Top