Bank of America, the second-biggest U.S. lender, agreed to pay government-backed Freddie Mac $404 million to resolve mortgage-repurchase claims.
The deal covers about 716,000 loans created by Charlotte, North Carolina-based Bank of America from Jan. 1, 2000, to Dec. 31, 2009, and sold to Freddie Mac, the firms said today in separate statements. The payment, minus credits of $13 million that the bank already paid Freddie Mac, is covered by reserves in place Sept. 30, the lender said.
Bank of America Chief Executive Officer Brian T. Moynihan, 54, has spent more than $50 billion settling claims tied to shoddy mortgages sold before he took over in 2010. Previous settlements, including one with Freddie Mac in January 2011, focused on loans sold by Countrywide Financial Corp., which the bank acquired in 2008. Today's deal resolved disputes over loans sold by Bank of America.
"We are pleased to have reached this agreement with Bank of America, which now allows both companies to move forward," Freddie Mac CEO Donald Layton said in one of the statements. "We continue to make very good progress in recovering funds that are due to the American taxpayer."