BofA pays $165 million to settle mortgage claims by credit unions
In yet another home lending legal settlement, Bank of America Corp. will pay regulators $165 million related to losses that big credit unions suffered on mortgage-backed securities.
The settlement, announced Tuesday, stems from efforts by the National Credit Union Administration to recover losses at five failed corporate credit unions, including Western Corporate Federal Credit Union in San Dimas.
The corporates, also known as wholesale credit unions, act as backup banks for retail credit unions that directly serve members of the public.
PHOTO GALLERY: Failed banks that caused greatest federal insurance losses
Bank of America admitted no wrongdoing in settling NCUA claims that the Charlotte, N.C., bank and its Countrywide and Merrill Lynch subsidiaries misrepresented the soundness of the mortgage securities. BofA said in its annual report that payment would be made out of reserves it already had set aside.
The settlement follows three similar agreements that NCUA struck with Citigroup Inc., Deutsche Bank Securities and HSBC totaling $170.75 million.
“These settlements and our ongoing lawsuits further NCUA’s goal of minimizing the losses of the corporate crisis and cutting future costs to credit unions,” NCUA Board Chairman Debbie Matz said in a statement.
NCUA uses the funds to reduce special assessments it is charging federally insured credit unions to pay for the losses caused by the failure of the five corporate credit unions.
Bank of America settled the NCUA claims before a lawsuit was filed. The regulator previously has filed lawsuits over credit union losses on mortgage bonds against defendants including Barclays Capital, Credit Suisse, Goldman Sachs, J.P. Morgan Securities, RBS Securities, UBS Securities, Wachovia, Washington Mutual, and Bear, Stearns.
Bank of America has paid out tens of billions of dollars to settle mortgage-related claims, most of them related to Countrywide Financial Corp., the giant Calabasas home lender that BofA acquired in 2008.
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