Tuesday, October 22, 2013

BofA Said to Face Three More U.S. Probes of Mortgage-Bond Sales

Bloomberg is reporting that Bank of America Corp., sued by U.S. attorneys in August over an $850 million mortgage bond, faces three additional Justice Department civil probes over mortgage-backed securities, according to two people with direct knowledge of the situation.

U.S. attorneys offices in Georgia and California are examining potential violations tied to Countrywide Financial Corp., the subprime lender Bank of America bought in 2008, said the people, who asked not to be identified because the inquiries aren’t public. U.S. attorneys in New Jersey are looking into deals involving Merrill Lynch & Co., purchased by the firm in 2009, the people said.

If claims are brought, Bank of America would join JPMorgan Chase & Co. (JPM) in facing Justice Department demands that it resolve liabilities inherited while buying weakened rivals at the government’s urging during the credit crisis. JPMorgan, the biggest U.S. bank, reached a tentative $13 billion agreement last week to end civil claims over mortgage-bond sales, including those handled by Bear Stearns Cos. and Washington Mutual Inc. operations purchased in 2008. Bank of America, led by Chief Executive Officer Brian T. Moynihan, 54, is being examined for violations of the Financial Institution Reform, Recovery and Enforcement Act of 1989, a relic of the savings-and-loan crisis known as FIRREA, according to the people. The Justice Department cited that statute in its August lawsuit against the firm, which is the nation’s second-largest lender after JPMorgan.

For more information - BofA Said to Face Three More U.S. Probes of Mortgage-Bond Sales - Bloomberg

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