BofA Settles $700M Mortgage Securities Suit with Allstate

By on April 9, 2014

Bank of America Corporation (NYSE: BAC) and Allstate Corporation (NYSE: ALL) settled a 2010 lawsuit filed in U.S. District Court, Central District of California involving allegations that BAC’s Countrywide unit issued $700 million in devalued mortgage-backed securities.  The terms of the settlement agreement were not disclosed.

Countrywide was the largest U.S. home-lender during the time leading up to the housing market collapse and 2008 financial crisis, originating or purchasing approximately $1.4 trillion in mortgages from 2005 to 2007.  Countrywide was accused of extending mortgages to unqualified borrowers and misleading investors as to the health of securities that were backed by those mortgages.

Along with the Allstate lawsuit, Bank of America resolved several other lawsuits against Countrywide including the following:

  • $9.5 billion settlement with the Federal Housing Finance Agency, the conservator of Fannie Mae and Freddie Mac, which purchased $26.6 billion in mortgage-backed securities that Countrywide sold between 2005 and 2008;
  • $8.5 billion settlement with investors who claims that Countrywide failed to buy back delinquent mortgages packaged in the securities; and
  • investor lawsuit involving claims that Countrywide tricked them into buying $500 million worth of the securities.

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