Bank of America reported near $17B mortgage settlement with Justice Dept.
Bank of America Corp. is nearing a $16 billion to $17 billion settlement with the U.S. Justice Department to resolve probes into sales of mortgage-backed bonds in the run-up to the financial crisis, a person familiar with the matter said.
Under the proposed terms, the bank would pay about $9 billion in cash and the rest in consumer relief to settle federal and state claims, according to the person, who asked not to be named because the negotiations are private. Details of the proposed accord, such as the relief and a statement of facts, are still being negotiated, the person said.
The outlines of the deal were reached last week after a phone call between Attorney General Eric Holder and Bank of America chief executive Brian T. Moynihan, the person said. During the July 30 call, Holder said that the government was ready to file a lawsuit in New Jersey if the bank didn't offer an amount closer to the department's demand of about $17 billion, according to the person.
Bank of America separately said yesterday it's raising its quarterly dividend to 5 cents a share and dropping a plan to buy back stock, after winning Federal Reserve approval of its proposal for managing its capital.
Lawrence Grayson, a spokesman for Charlotte, North Carolina-based Bank of America, and Brian Fallon, a Justice Department spokesman, declined to comment on the mortgage settlement.
The agreement, if finalized, would cement Bank of America's status as the firm punished hardest for faulty mortgage practices. It would eclipse Citigroup Inc.'s $7 billion settlement in July and JPMorgan Chase & Co.'s $13 billion deal in November.
Bank of America's settlement also comes on top of its $9.5 billion deal in March to resolve related Federal Housing Finance Agency claims.
The current talks center on faulty loans that Bank of America, now the second-largest U.S. lender, inherited from Countrywide Financial Corp. and Merrill Lynch & Co., which it purchased in 2008 at the apex of the financial crisis.
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