BofA MBS Accord With U.S. Said Coming as Soon as Today

Aug. 21 (Bloomberg) -- Bank of America just announced it will pay the largest settlement in U.S. history for its role in selling toxic mortgage securities. Bloomberg takes a look at five surprising things that are valued at less than Bank of America's $16.65 billion settlement. (Source: Bloomberg)

Bank of America Corp.’s record U.S. settlement over the sale of mortgage bonds in the run-up to the 2008 financial crisis could be announced as soon as today, two people with knowledge of the matter said.

The bank will pay about $17 billion, including more than $9 billion in cash, said one of the people, who requested anonymity because the deal hasn’t been disclosed. The agreement would resolve civil investigations by federal and state prosecutors in California, New York and New Jersey, as well as a lawsuit filed in North Carolina, the people said.

The accord will cement Bank of America’s status as the firm punished hardest for faulty mortgage practices and put an end to woes stemming from its disastrous purchase of subprime lender Countrywide Financial Corp. in 2008. The penalty eclipses Citigroup Inc.’s $7 billion settlement in July and JPMorgan Chase & Co.’s $13 billion agreement in November.

Bank of America’s settlement also comes on top of its $9.5 billion deal in March to resolve related Federal Housing Finance Agency claims.

Lawrence Grayson, a Bank of America spokesman, and the Justice Department’s Ellen Canale declined to comment.

Bank of America shares rose 0.5 percent to $15.52 in New York, erasing an earlier decline, after the Associated Press reported the bank had reached a $17 billion accord.

Photographer: Andrew Harrer/Bloomberg

Under Chief Executive Officer Brian T. Moynihan, Bank of America has already incurred about $55 billion in expenses tied to home loans, mostly linked to Countrywide. Close

Under Chief Executive Officer Brian T. Moynihan, Bank of America has already incurred... Read More

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Photographer: Andrew Harrer/Bloomberg

Under Chief Executive Officer Brian T. Moynihan, Bank of America has already incurred about $55 billion in expenses tied to home loans, mostly linked to Countrywide.

Countrywide Loans

Under Chief Executive Officer Brian T. Moynihan, Bank of America has already incurred about $55 billion in expenses tied to home loans, mostly linked to Countrywide.

Countrywide has been blamed by lawmakers and regulators for using lax underwriting standards and predatory lending that fueled its ascent to the biggest U.S. mortgage lender before its collapse and $2.5 billion sale to Bank of America.

Federal prosecutors in California are preparing a lawsuit against Countrywide co-founder Angelo Mozilo and as many as 10 other former Countrywide employees, according to two people with knowledge of the matter. The suit could be filed in Los Angeles in the coming months, the people said.

To contact the reporters on this story: Tom Schoenberg in Washington at tschoenberg@bloomberg.net; Keri Geiger in New York at kgeiger4@bloomberg.net

To contact the editors responsible for this story: Sara Forden at sforden@bloomberg.net Dan Reichl

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