BofA Near $8.5B Deal to Settle Big Investors' Claims

BlackRock, New York Fed lost money on mortgage-backed securities
By Newser Editors and Wire Services
Posted Jun 28, 2011 6:48 PM CDT
BofA Near $8.5B Deal to Settle Big Investors' Claims
Bank of America's corporate headquarters is shown in Charlotte, N.C.   (AP Photo/Chuck Burton)

Bank of America is close to a deal that calls for the lender to pay $8.5 billion to settle claims from a group of heavyweight investors who bought mortgage-backed securities before the housing collapse and lost a ton of money in the process. A person familiar with the discussions said the bank is expected to announce the deal as early as tomorrow.

The investors—which include the Federal Reserve Bank of New York, BlackRock Financial Management, and MetLife—have pressed the lender to buy back defaulted mortgages made by its Countrywide unit. A Wall Street Journal report estimated the group holds more than $56 billion in mortgage-backed securities and said the deal could prompt similar ones at other banks. (More Bank of America stories.)

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