Bank of America Forks Out $10 Billion, But Moynihan Is All Smiles
Bank of America (NYSE:BAC) will pay Fannie Mae over $10 billion to settle claims over troubled mortgages. Under the terms of the settlement, BofA will give Fannie Mae $3.6 billion, while also spending $6.75 billion to buy back mortgages.
Bank of America is earnestly trying to step away from the mortgage business that sent their shares crashing to 1995 values, and in its attempts it is selling off some 2 million loans that it currently services, as well as the servicing rights to some $306 billion in home loans. Newcastle Investment Corporation (NYSE:NCT) and Nationstar Mortgage Holdings (NYSE:NSM) have announced that they are buying the servicing rights.
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All this activity is expected to leave Bank of America with a fourth-quarter net loss of $2.5 billion. However, the bank is currently focused on its long-term health and growth, and CEO Brian Moynihan has said that the bank’s recent activity will help to streamline and simplify the bank and reduce long-term expenses.
There is still a rocky road ahead for Bank of America as disputes with the Federal Reserve Bank of New York — among others — have yet to be resolved.
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