Bank of America, Fannie Still Battling over Loan Repurchase Requests
Bank of America told investors July 18 that its ongoing dispute with Fannie Mae over almost $8 billion in mortgage repurchase requests would be resolved, but Fannie would have to choose the method — either settlement or litigation, HousingWire reported.
The two entities have disagreed for months over how to handle $7.9 billion in mortgages that Fannie insists the bank should buy back due to alleged faulty loan origination practices. The claims involve mortgages originated in 2006 and 2007. Much of the bank’s troubled mortgage inventory comes from its purchase of Countrywide Financial in 2008.
The bank has argued that it should not have to buy back the loans since borrowers made at least 25 payments on them, HousingWire reported.
Bank of America’s reserves for repurchases increased to $15.9 billion this year, while overall outstanding claims have risen to $22.7 billion. Repurchase claims from both Fannie and Freddie Mac have reached almost $11 billion.
Bruce Thompson, Bank of American’s chief financial officer, told investors that “We expect these claims to grow as the process for ultimate resolution continues to evolve and remains unclear,” HousingWire reported.
The bank expects to reduce its inventory of delinquent mortgages by 300,000 in the next 12 months. It already has reduced delinquent inventory by 214,000 mortgages over 2011 figures.
At present, Bank of America has more than a million home loans in its portfolio that are at least 60 days delinquent, with plans to transfer servicing for another 15,000 delinquent loans this month.
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