Bank of America Close to a $8.5 billion Settlement with MBS Claims

Jun 28, 2011
J. Webster
Comments Off on Bank of America Close to a $8.5 billion Settlement with MBS Claims

Bank of America (BAC) is close to a $8.5 billion settlement with a host of big time mortgage backed securities investors. Shares are up over 3% in after hours trading on the news. This could help all the financial stocks tomorrow. And, maybe, help turn the banks stock around heading into their earnings season. They have been perhaps the most hated stocks in the market for some time now. Is there hope for them yet? We’ll see.

Here’s the story from the WSJ:

A deal would end a nine-month fight with a group of 22 investors that hold more than $56 billion in mortgage-backed securities at the center of the dispute, including giant money manager BlackRock Inc., insurer MetLife Inc. and the Federal Reserve Bank of New York.

The deal could embolden mutual-fund managers, insurance companies and investment partnerships to go after similar settlements with other major U.S. banks, arguing that billions in loans scooped up before the U.S. housing collapse didn’t meet sellers’ promises or were improperly managed. Most vulnerable would be Wells Fargo & Co and J.P. Morgan Chase & Co., which along with Bank of America collect loan payments on about half of all outstanding U.S. mortgages.

You’d have to think that getting all of this out of the way would enable bank stocks, and Bank of America, start fresh and maybe, just maybe start lending money again likes most normal banks do. However, this may not be the last of the lawsuits related to mortgage backed securities…

Do you feel the least bit bad for BAC? Not even a little. One day they’ll recover, might not be a few years from now though.

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