Bank of America just confirmed that it has agreed to pay $8.5 billion to settle claims from, as The Associated Press reported earlier, "a group of blue-chip investors that [said] the bank sold them poor-quality mortgage-backed securities that went sour when the housing market tanked."
The wire service adds that:
"The deal comes eight months after the group fired off a letter to Bank of America demanding that it repurchase $47 billion in mortgages that its Countrywide unit sold to them in the form of bonds. The investors have argued that Countrywide's practice of modifying loans found to have faulty paperwork or those written outside of normal underwriting standards breached signed agreements with the investors. By continuing to service bad loans rather than speeding up foreclosures, the group has claimed that Countrywide ran up servicing fees, enriching itself at the expense of investors."
Bank of America bought Countrywide in 2008. In announcing the agreement, the bank issued this statement from CEO Brian Moynihan:
"This is another important step we are taking in the interest of our shareholders to minimize the impact of future economic uncertainty and put legacy issues behind us. 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."