Bank of America mortgage talks said to stall as U.S. readies lawsuit
06/11/2014 5:35 PM
06/11/2014 5:57 PM
The U.S. is preparing to sue Bank of America Corp. amid an impasse in talks to resolve government probes of the lender’s sale of mortgage-backed bonds before the financial crisis, a person familiar with the matter said.
The Justice Department broke off negotiations earlier this week because it was dissatisfied with the bank’s offer to pay more than $12 billion, which included at least $5 billion in consumer relief, according to the person, who asked not to be identified because the discussions are private.
The department’s latest settlement request was for about $17 billion, though negotiators were willing to consider less, the person said. The amount would come on top of the $9.5 billion the bank agreed to pay in March to resolve Federal Housing Finance Agency claims.
A lawsuit isn’t imminent and is unlikely to be filed this week in part because Associate Attorney General Tony West, who has been leading negotiations with the bank since March, is on government business in Alaska, the person said.
Lawrence Grayson, a Bank of America spokesman, declined to comment.
Charlotte-based Bank of America, the second-biggest U.S. lender, is among at least eight banks under investigation by the Justice Department and state attorneys general for misleading investors about the quality of bonds backed by mortgages amid a drop in housing prices. Many of the loans were inherited by the bank when it purchased subprime lender Countrywide Financial Corp. and Merrill Lynch & Co.
The New York Times reported Tuesday that negotiations between the parties had broken off.
The talks were aimed at resolving civil probes by federal and state prosecutors in California, New York and New Jersey, two people have said. An agreement also would have included a lawsuit pending in North Carolina federal court.
Bank of America hasn’t specified how much money it has set aside for the case. The lender said April 16 that it increased reserves for mortgage-related matters by $2.4 billion.
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