Big bank hit with yet another mortgage-bond settlement

by Ryan Smith04 May 2016
Bank of America is limbering up its checkbook to settle legal woes once again. The bank said that it’s reached a $190 million settlement to resolve claims from Federal Home Loan Bank of Seattle over mortgage-backed securities it sold before the financial meltdown.

BoA disclosed the settlement in a regulatory filing, according to a Bloomberg report. The bank said it had already set aside funds to cover the settlement.

Seattle Bank, which merged last year with Federal Home Loan Bank of Des Moines, was one of a dozen government-sponsored regional lenders that supply financing to member banks and finance companies, Bloomberg reported. The lender accused BoA of omitting information and making misstatements about the quality of the mortgages backing the securities BoA sold.

Bank of America’s settlement is just the latest in a string of payments to Seattle Bank, which filed suit against more than 10 lenders in 2009. Goldman Sachs last month reached a $37.5 million settlement with Seattle Bank’s successor, Des Moines Bank, as part of a $5.1 billion settlement with the Department of Justice, Bloomberg reported.

Bank of America has faced numerous legal woes in the last few years. When the bank purchased subprime lender Countrywide Financial Corp. in 2008, Countrywide’s considerable legal problems became BoA’s. Bank of America has paid more than any other U.S. lender to resolve claims over the sale of residential mortgage-backed securities, according to Bloomberg data.


Should CFPB have more supervision over credit agencies?