Bank of America (BofA) is reportedly engaged in negotiations with the US Department of Justice (DOJ) and many other states to settle all civil probes as well as alleged handling of faulty mortgages in lieu of a USD$12 billion payment.
If the settlement gets the regulatory approval, approximately USD$5 billion is expected to go toward consumer relief, including assisting homeowners in decreasing principal amounts and reducing monthly payments, as reported by the Wall Street Journal.
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The proposed settlement will be in addition to US$6 billion settlement, BofA reached with the Federal Housing Finance Agency over similar issues, and combining both fines will US$18 billion, thereby surpassing JPMorgan US$13 billion mortgage settlement last year.
The news agency reported that US$12 billion would include both "hard money," or fines, and "soft money," or consumer relief. The bank has agreed to pay more than half of its settlement through soft money.
BofA, JPMorgan and among banks, which sold out faulty residential mortgage to unqualified consumers, packaging those mortgages into securities, despite being aware that they would eventually bust.
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By GlobalData
