Today, Bank of America announced it has agreed to pay $3.6 billion to Fannie Mae to settle claims related to residential mortgage loans for the nine years to the end of 2008. As part of the settlement with Fannie Mae, the bank will repurchase $6.75 billion of residential mortgage loans sold to the government agency. Bank of America representatives said the settlement will reduce its fourth-quarter pretax income by about $2.7 billion. After the announcement, shares of Bank of America traded higher in pre-market trading.
Bank of America is just one of many large financial institutions that have been accused of originating and packaging subprime mortgage loans which eventually defaulted and lead to the credit and financial markets crisis of 2008.