(Bloomberg) -- Bank of America Corp., the second-biggest U.S. lender, will repurchase $330 million of home loans from Freddie Mac, the mortgage company supported by taxpayers, after flaws were found in how they were created.
Payments on the “vast majority” of the loans are current, according to Dan Frahm, a spokesman for the Charlotte, North Carolina-based bank. McLean, Virginia-based Freddie Mac disclosed the buybacks in a statement yesterday, without directly citing the lender.
Bank of America agreed to the refunds “because the valuation method used at origination did not meet the investor’s technical requirements,” Frahm said in an e-mail, adding that the flaws have been fixed. Brad German, a spokesman for Freddie Mac, declined to comment.
Chief Executive Officer Brian T. Moynihan is seeking to limit further losses at the bank after booking more than $42 billion in costs tied to defective home loans. Buyers and insurers of mortgage securities have demanded compensation for shoddy debt created by Countrywide Financial Corp., which Bank of America bought in 2008 when the target ranked as the nation’s biggest residential lender.
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