By Paul Handley | AFP – Mon, Jan 7, 2013
Bank of America endured the most punishment, mainly due to its 2008 takeover of home lender Countrywide Financial, when it agreed to pay mortgage finance giant Fannie Mae $11.6 billion to settle claims that it sold Fannie hundreds of billions of dollars’ worth of dud home loans.
Many of those loans, packed into securities, plunged into default after the housing bubble crashed in 2006, destroying the value of Fannie’s investments and forcing it into a government bailout.
Meanwhile 10 banks, including Bank of America, agreed Monday with regulators to shell out $8.5 billion in cash and assistance to homeowners to settle accusations that they had forced millions into foreclosure while ignoring borrowers’ attempts to make good on their mortgages.
The two settlements were just the newest in the ongoing shakeout from the financial crisis, rooted in housing market implosion and the subsequent tanking of the multitrillion-dollar mortgage-backed securities market.