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BofA Will No Longer Sell New Loans to Fannie Mae


""Bank of America"":https://www.bankofamerica.com/ and ""Fannie Mae"":http://www.fanniemae.com/portal/index.html



Bank of America will no longer sell new loans to Fannie Mae due to disputes over repurchase claims. The North Carolina-based bank will still deliver modifications and refinancings for Fannie Mae loans. The disclosure was made Thursday in the bank's Securities and Exchange Commission (SEC) filing.

""Beginning in February 2012, we are no longer delivering purchase money and non-Making Home Affordable Program refinance first-lien residential mortgage products into FNMA mortgage-backed securities pools,"" the bank stated in its filing.



BofA lost billions due to having to buy back defaulted loans. In January 2011, the bank paid about $2.5 billion to Fannie Mae and Freddie Mac for loans that were allegedly originated with improper underwriting standards. Due to a settlement in June 2011, the bank also agreed to pay $8.5 billion to Bank of New York and a group of 22 institutional investors, according to a research note from ""Barclays Capital"":http://www.barcap.com/.

""The non-renewal of these contractual delivery commitments and variances was influenced, in part, by our ongoing differences with FNMA in other contexts, including repurchase claims,"" the bank stated in its SEC filing.

The filing also stated that BofA and Countrywide sold approximately $1.1 trillion of loans originated from 2004 through 2008 to the Fannie Mae and Freddie Mac. In addition, Countrywide and subsidiaries sold loans originated from 2004 through 2008 with an original principal balance of $963 billion to investors other than GSE, the SEC filing states.

The total amount for unresolved repurchase claims from all sources totaled approximately $14.3 billion as of December 31, 2011. The total amount of the bank's recorded liability related to repurchase claims was $15.9 billion as of December 31, 2011, the bank stated in its SEC filing.

About Author: Esther Cho


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