By Cheryl Tay:
Bank of America Corp, the second-biggest lender in the US, will buy back US$330 million (S$421.55 million) of mortgages from Freddie Mac, after flaws were discovered in how they were made.
Dan Frahm, a company spokesman, said the payments on most of the loans are current. Meanwhile, Freddie Mac disclosed the repurchases in a statement, without directly citing the lender.
Brian T. Moynihan, President and Chief Executive of BofA, said it is seeking to limit further losses after booking over US$42 billion (S$53.6 million) in defective home loans. Many insurers and buyers of mortgage securities demanded compensation for debt caused by Countrywide Financial Corp, which BofA acquired in 2008.
In January 2011, BofA and Freddie Mac announced a US$1.28 billion (S$1.6 billion) settlement over bad loans sold in 2008 by Countrywide. According to data compiled by Bloomberg, other business between the two companies was not covered by the deal, and at least some of the loans covered by the latest announcement by Freddie Mac have more recent origination dates.
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