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Bank of America's multi-billion bad debt buyback


Bank of America's multi-billion bad debt buyback


In the United States, Bank of America is forking out nine billion euros to settle a long-running row with the government-owned mortgage agency Fannie Mae.

As part of the deal, the bank will spend more than five billion euros buying back some of the bad home loans it sold to Fannie Mae before the subprime credit crisis hit in 2008.

In July of that year Bank of America had bought Countrywide Financial, a giant in mortgage lending with a reputation for approving risky loans.

Fannie Mae and other lenders like Freddie Mac argued that the toxic packages they had been sold were based on flawed data about the properties and borrowers.

In a separate settlement the bank will also pay Fannie Mae almost a billion euros in compensation relating to problems with foreclosures.

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