Bank of America is set to pay $8.5 billion to various individuals for housing crash claims which will lead the financial institution to have $9.1 billion worth of losses for the second quarter of the year 2011.
The money will be sourced from Bank of America’s arm, Countrywide. The $8.5 billion will be used to pay for the claims of individuals asserting that BoA sold low quality mortgage backed bonds that eventually did not have value when the housing market plunged.
The mortgages were given without proper checks on the credit qualifications of the borrowers.
This year, this will be the third payout of its kind.
BoA said that they will have $5.5 billion worth of provisions on the side.
According to Brian Moynihan, “We will continue to act aggressively and in the best interest of our shareholders to clean up the mortgage issues largely stemming from our purchase of Countrywide.” Mr. Moynihan is the chief executive of Bank of America.
During the pre-US market trading, it was noted that their shares were up by 6% due to investors thinking that the issue has been resolved and closed.
During the early months of the year, the Bank of America struck a deal as they agreed to pay mortgage leaders in the United States Fannie Mae and Freddie Mac the amount of $2.6 billion.
Those claims were linked to the loans that were sold by Countrywide Financial Corporation which became a part of Bank of America back in 2008.
Tags: housing crash, proper checks, financial institution, mortgage issues, Bank of America Home Loans, brian moynihan
politicians aside.. i put blame squarely on banks, financial institutions, mortgage brokers, loans officers, ect ect. these folks were the ones who qualified the americans to get a home they couldnt afford just to get a pretty penny from the sale. they gave the worst advice, and now the housing crisis has turned into the economic crisis.
i cant really blame the americans, it wasnt their fault they lost their homes due to losing their jobs.
He Chief Executived America into trillions of dollars of debt.