Sara Routhier, Managing Editor and Outreach Director, has professional experience as an educator, SEO specialist, and content marketer. She has over five years of experience in the insurance industry. As a researcher, data nerd, writer, and editor she strives to curate educational, enlightening articles that provide you with the must-know facts and best-kept secrets within the overwhelming world o...

Full Bio →

Written by

Joel Ohman is the CEO of a private equity-backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He also has an MBA from the University of South Florida. ...

Full Bio →

Reviewed by Joel Ohman
Founder, CFP® Joel Ohman

UPDATED: Jan 8, 2013

Advertiser Disclosure

Advertiser Disclosure: We strive to help you make confident loan decisions. Comparison shopping should be easy. We are not affiliated with any one loan provider and cannot guarantee quotes from any single provider. Our partnerships don’t influence our content. Our opinions are our own. To compare quotes from many different companies please enter your ZIP code on this page to use the free quote tool. The more quotes you compare, the more chances to save.

Editorial Guidelines: We are a free online resource for anyone interested in learning more about loans. Our goal is to be an objective, third-party resource for everything loan related. We update our site regularly, and all content is reviewed by experts.

On Monday, Bank of America reached an $11.6 billion settlement with Fannie Mae for poor mortgage-backed investments made during the housing crash.

Bank of America will pay Fannie Mae $3.55 billion in a cash settlement and will buy back $6.75 billion in mortgage loans that Bank of America and their 2008-acquired subsidiary, Countrywide Financial, sold to the mortgage giant from Jan. 1, 2000 to Dec. 31, 2008.

Fannie Mae believed Bank of America failed to meet underwriting standards when approving the mortgage loans in question.

About 30,000 loans are included in the buy-back.  

Bank of America is also required to pay $1.3 billion to address servicing issues.

In a released report, Bank of America said it would pay for the settlement with existing reserves and other provisions.  

“These agreements are a significant step in resolving our remaining legacy mortgage issues, further streamlining and simplifying the company and reducing expenses over time,” said Bank of America Chief Executive Officer Brian Moynihan in the release.

Fannie Mae said it is pleased to reach an appropriate agreement.

Bradley Lerman, executive vice president and general counsel of Fannie Mae, said the outcome of the dispute between organizations is “in the best interest of taxpayers,” according to a statement.

In addition to the settlement, Bank of America agreed to sell the servicing rights on approximately two million mortgage loans serviced for Fannie Mae, the Federal Home Loan Mortgage Corporation (Freddie Mac), the Government National Mortgage Association (Ginnie Mac) and private label groups. The loans are worth a total of $306 billion.

“We are resolving legacy mortgage issues while balancing the needs of our customers, mortgage investors, our shareholders and communities,” Ron Sturzenegger, Legacy Asset Servicing executive for Bank of America, said in the report. “Bank of America will work closely with our customers, buyers and the investors who own the loans to ensure a smooth transition to their new servicer.”