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Fiji Time: 10:28 PM on Saturday 30 August

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Bank settles loan claims

Bbc.Co.Uk
Wednesday, January 09, 2013

BANK of America has agreed to pay US government mortgage agency Fannie Mae $US3.6b ($F6.4b) to settle claims relating to residential home loans. In addition, it has agreed to buy back 30,000 mortgages for $US6.75b ($F12.01b) and pay a further $US1.3b ($F2.31b) in compensation. Fannie Mae argued the bank sold it toxic debts and should be responsible for the losses it suffered as a result.

Separately, 10 big mortgage providers agreed to pay $US8.5b ($F15.1b) in compensation for mistakes in repossessing homes. The banks include Bank of America, Citigroup, JP Morgan and Wells Fargo.

They will pay $US3.3b ($F5.8b) directly to homeowners, some of whom should not have lost their homes, regulators said.

Individual owners will receive anything from a few hundred dollars to $US125,000 ($F222,000).

Fannie Mae supports the US mortgage market, which collapsed in 2008 after the housing bubble burst.

In the run-up to the financial crisis of 2007-08, home loans grouped together and sold on as investments became increasingly popular.


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