Bank of America will buy back $330 million of home mortgages from Freddie Mac because the bank did not get full appraisals on some properties, raising concerns that some newly-originated loans are not meeting underwriting guidelines.

Dan Frahm, a B of A spokesman, told American Banker Wednesday that the buybacks were a "one time occurrence."

"Bank of America erroneously used" automated valuation models, or AVMs, for certain properties including apartment buildings and manufactured housing, "prompting the repurchase," Frahm said. "The error that allowed AVMs for these properties has been corrected."

Both Fannie Mae and Freddie Mac prohibit the use of AVMs for originating first lien mortgages. Fannie's guidelines state that the models "have generally not evolved sufficiently to fully replace traditional appraisals and human judgment for the origination of first lien mortgages."

AVMs, which are cheaper than appraisals, are computer-generated reports that calculate a property's value within seconds based on comparable sales data, property characteristics, tax assessments, and price trends.

Barclays analysts Nicholas Strand, Sandipan Deb and Siddarth Ramkumar wrote in a research note on Wednesday that one concern "would be whether similar buyouts are being considered or being implemented at Fannie Mae."

The majority of the loans B of A repurchased were originated in 2010 and 2011, according the Barclays note, which said the repurchases "will generate concerns around buyouts on newly originated loans."

Freddie announced the repurchases Tuesday, saying they would be completed by the end of May, but it did not identify Bank of America as the purchaser.

B of A stopped selling residential mortgages to Fannie Mae in February due to ongoing disputes over mortgage repurchase claims. The second-largest bank by assets reached a $1.3 billion settlement with Freddie last year to resolve soured loans originated by Countrywide Financial.

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