Bank of America Corp. could announce as early as this morning an agreement to pay $8.5 billion to settle claims by a group of investors that took losses on soured mortgage-backed securities, people familiar with the matter said.
The settlement would be the largest any financial institution has paid to resolve disputes with investors who bought home loans packaged into bonds during the housing boom. For Bank of America, it’s also the latest damage stemming from its 2008 purchase of Countrywide Financial.
The payment would equate to about one-third of the Charlotte bank’s $26.8 billion in revenue in the first quarter and more than quadruple the $1.7 billion profit it made in the period.
Bank of America began talks last fall with the investors, which include money manager BlackRock Inc. and the Federal Reserve Bank of New York. The investors bought the loans from Countrywide, which Bank of America purchased for $4 billion in 2008.
The investors, who are represented by a Texas law firm, hold about 230 securitizations with original collateral exposure of about $177.1 billion, according to a securities filing. The Fed inherited Countrywide loans during the 2008 bank bailouts.