The Federal Housing Finance Agency (FHFA) has approved an agreement between Fannie Mae and Bank of America (BofA) to resolve certain claims related to mortgages sold to Fannie Mae between 2000-2008, including the repurchase of approximately 30,000 loans by Bank of America.
“As we enter 2013, we sharpen our focus on serving our three customer groups and helping to move the economy forward,” said Bank of America Chief Executive Officer Brian Moynihan. “Together, these agreements are a significant step in resolving our remaining legacy mortgage issues, further streamlining and simplifying the company and reducing expenses over time.”
In addition, FHFA has approved the transfer of servicing for roughly one million loans from Bank of America to specialty servicers. The approval of these agreements is consistent with FHFA’s responsibilities as conservator of Fannie Mae. The agreements were also reviewed and approved by the Fannie Mae Board of Directors.
“We are resolving legacy mortgage issues while balancing the needs of our customers, mortgage investors, our shareholders and communities. The sale of mortgage servicing rights to highly rated specialty servicing companies is an important step in that process,” said Ron Sturzenegger, Legacy Asset Servicing executive for Bank of America. “Bank of America will work closely with our customers, buyers and the investors who own the loans to ensure a smooth transition to their new servicer. Importantly, each of these specialty servicers has committed to adhere to the same servicing standards as provided under the National Mortgage Settlement.”
“Resolving these issues at this time is in the best interest of taxpayers and reduces uncertainty in the nation’s mortgage finance market,” said FHFA Acting Director Edward J. DeMarco. “This is a major step forward in resolving issues from the past and providing greater certainty in the marketplace, which remain critical FHFA goals as conservator. I am pleased with the resolution achieved and thank everyone involved for their efforts.”
The transfer of mortgage servicing to specialty servicers is structured to benefit borrowers and reduce future credit losses to Fannie Mae. In connection with this servicing transfer, the companies agreed to resolve outstanding and certain expected compensatory fees owed by Bank of America due to delays in delinquent borrower resolution timelines.
The combined agreements provide Fannie Mae with a recovery of losses from origination and servicing defects that have been, or could have been absorbed by taxpayers in the absence of a resolution of these matters.