Originally published on Tue August 6, 2013 2:33 pm
By Eyder Peralta
The Department of Justice announced Tuesday that it was suing Bank of America for allegedly lying to investors about the riskiness of about $850 million worth of mortgage-backed securities back in 2008.
Six former employees and one contractor say Bank of America's mortgage servicing unit consistently lied to homeowners, fraudulently denied loan modifications and offered bonuses to staff for intentionally pushing people into foreclosure, according to a Salon.com report.
Bank of America announced this morning that it will pay the Federal National Mortgage Association (Fannie Mae) $3.6 billion in cash and will buy back $6.75 billion worth of mortgages to resolve claims related to mortgage-backed securities sold to Fannie Mae by the bank and Countrywide Financial Corp. (which BofA acquired in 2008.
While denying it did anything wrong, Bank of America announced this morning it will pay "$2.43 billion and institute certain corporate governance policies ... to settle a class action lawsuit brought in 2009 on behalf of investors who purchased or held Bank of America securities at the time the company announced plans to acquire Merrill Lynch."