U.S. housing regulators abandoned their lawsuit against Bank of America Corp.’s Merrill Lynch unit as part of a $9.5 billion settlement resolving allegations the bank misrepresented loans packaged into bonds.
The bank and the Federal Housing Finance Agency filed papers in Manhattan federal court today dropping the suit, a step in putting the financial crisis behind the firm. Charlotte, North Carolina-based Bank of America announced the settlement March 26.
Under the agreement, the lender will pay $6.3 billion in cash to Fannie Mae and Freddie Mac to resolve lawsuits claiming it misrepresented loans packaged into bonds that were bought by the U.S.-owned mortgage firms. The company also said it will buy back about $3.2 billion of mortgage bonds from them.
Chief Executive Officer Brian T. Moynihan, 54, has spent more than $50 billion to resolve claims related to mortgages, most tied to his predecessor’s 2008 purchase of Countrywide Financial Corp.
The case is Federal Housing Finance Agency v. Bank of America Corp. (BAC), 11-cv-06195, U.S. District Court, Southern District of New York (Manhattan).
To contact the reporter on this story: Bob Van Voris in federal court in Manhattan at firstname.lastname@example.org
To contact the editors responsible for this story: Michael Hytha at email@example.com Andrew Dunn, Mary Romano