21 Aug 2014

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Bank of America settles mortgage probes

North Carolina - Bank of America has reached a $16.65bn settlement with US regulators to settle charges that it misled investors into buying troubled mortgage-backed securities.

The settlement announced on Thursday by the US Department of Justice calls for the second-largest US bank to pay a $9.65bn cash penalty, and provide about $7bn of relief to struggling borrowers.

It is expected to resolve the vast majority of the Charlotte, North Carolina-based bank's remaining liabilities tied to its purchases of Countrywide Financial, once the nation's largest mortgage lender and Merrill Lynch & Co.

Bank of America said the accord is expected to reduce third-quarter earnings by about $5.3bn before taxes, or about 43 cents per share after taxes.

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