Bank of America Nears $16.5 Billion Mortgage-Bond Settlement

Wednesday, 06 Aug 2014 06:44 PM

 

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Bank of America Corp. is close to a deal with the U.S. Department of Justice to pay more than $16.5 billion to end investigations into mortgage securities that the bank and its units sold in the run-up to the financial crisis, a person familiar with the matter said on Wednesday.

The bank has agreed to pay around $9 billion in cash and the rest in help to struggling homeowners, said the person who was not authorized to speak publicly about the matter.

A BofA representative was not immediately available for comment.

Negotiations continued on Wednesday, with a meeting between Bank of America general counsel Gary Lynch and the No. 3 official at the Justice Department, Tony West, the person said. An announcement of a final deal is not expected this week.

The agreement in principal was reached after a phone call last Thursday between BofA Chief Executive Brian Moynihan and Attorney General Eric Holder, the person said.

The bank raised its earlier offer of $14 billion, to resolve three Justice Department investigations as well as claims from the Federal Deposit Insurance Corp and several states.

Citigroup Inc agreed to pay $7 billion over similar charges last month.

Bank of America's shares edged up to $15.27 after closing at $15.20 on the New York Stock Exchange.

© 2014 Thomson/Reuters. All rights reserved.

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