BofA reportedly settles mortgage claims for $17B


Bank of America (BAC +0.4%) will pay $10B in cash and provide customer relief valued at $7B in a settlement with federal and state authorities over its role in mortgages leading up to the financial crisis, reports the AP.

The deal also requires the bank to acknowledge making misrepresentations about the quality of MBS packaged and sold by it, Countrywide, and Merrill Lynch.

Previously: BofA reportedly near $16B-$17B deal with DOJ

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Comments (39)
  • d7mead
    , contributor
    Comments (40) | Send Message
     
    sounds like a bully shakedown
    20 Aug 2014, 02:43 PM Reply Like
  • Daniel Niño
    , contributor
    Comments (59) | Send Message
     
    Finally
    20 Aug 2014, 02:43 PM Reply Like
  • JayXu
    , contributor
    Comments (266) | Send Message
     
    I hate this
    20 Aug 2014, 02:45 PM Reply Like
  • Dirty Capitalist
    , contributor
    Comments (184) | Send Message
     
    Was really hoping this was going to court. I wanted to hear how deep the regulators were in all this.
    20 Aug 2014, 02:49 PM Reply Like
  • mag1205
    , contributor
    Comments (2240) | Send Message
     
    Dirty Captalist:

     

    Going to court was going to be drag on BAC share price. It's better that BAC & DOJ agreed to the terms. With this current Obama administration, they are nothing but thugs. It was the Govt. which was responsible for this screw up & they forced BAC to buy Country Wide & so on. Now they see banks making money so they want all the profits going to treasury one way or the other. Look at Fannie & Freddie. Treasury is sweeping all the profits from these mortgage companies & shareholders are getting wiped out. Still long BAC.
    20 Aug 2014, 03:00 PM Reply Like
  • Invest84
    , contributor
    Comments (262) | Send Message
     
    Come on mag1205 - get your facts straight.

     

    BAC bought Countrywide in January of 2008, before Bear Stearns and certainly before the September crash. The government had nothing to do with this. Ken Lewis (BAC CEO at the time) just made a terrible acquisition, and when you acquire a company, you acquire their liabilities.
    20 Aug 2014, 08:07 PM Reply Like
  • amn440
    , contributor
    Comments (16) | Send Message
     
    Fine, who cares, a couple months from now, like the other banks, it is past and there are no material unknowns out there for BAC. On with the with business! The stock is undervalued by any measurement, and if growth, and the interest rate curve normalizes, the bank will take off.
    20 Aug 2014, 02:50 PM Reply Like
  • Invest84
    , contributor
    Comments (262) | Send Message
     
    Interest normalizes? If you look at history, the spread between the 10 year and 1 year is near lows. So normalization would imply a flattening would actually hurt BAC because they borrow short and lend long.
    20 Aug 2014, 08:08 PM Reply Like
  • overunder
    , contributor
    Comments (40) | Send Message
     
    The entire Justice Department authorized budget for the 2015 FY is $21 Billion. The Department has extorted much more than that this year from the banks with BAC paying the lion's shares. These are huge, mind boggling sums which would not be dreamed of in any other country. This is a sorry day for corporate America and the American people when the federal administrative branch aided and abetted by the judicial branch can extort these sums of money from publicly held companies. I wish Moynihan had some nerve and had hung on until a change in administrations. Makes me wonder if Lewis would have had more strength. Based on the way he caved to the feds regarding the purchase of ML, I presume not.
    20 Aug 2014, 02:53 PM Reply Like
  • mag1205
    , contributor
    Comments (2240) | Send Message
     
    DOJ was like a bad dream for BAC shareholders. Thank God this monkey is off our backs now officially. Hopefully we can look for brighter future for BAC shareholders. Long suffering shareholders can now breathe a sigh of relief. Long BAC
    20 Aug 2014, 02:54 PM Reply Like
  • Jason Cawley
    , contributor
    Comments (5724) | Send Message
     
    The monkey is not off your back. The monkey owns you and everything you will ever earn. They can just take it any time they feel like it. You own nothing.
    20 Aug 2014, 03:01 PM Reply Like
  • WMARKW
    , contributor
    Comments (10766) | Send Message
     
    JasonC - Amen. You only own what you can keep by whatever action is necessary. You rent everything else. Taxes on property, cars, boats, trailers, snow mobiles, jet skis, rental property, sales and use taxes on previously purchased business assets that are not (or possibly) fully depreciated, minerals, water below your property, rain water on your property, etc, etc, etc.
    20 Aug 2014, 04:17 PM Reply Like
  • thewhale87
    , contributor
    Comments (12) | Send Message
     
    I would advise waiting on the details before anybody takes or removes positions...strange that there is one AP source on this. This kind of settlement would normally be orchestrated and definitely would be on BofAs website. C and JPM orchestrated it.
    20 Aug 2014, 03:02 PM Reply Like
  • rocback
    , contributor
    Comments (1098) | Send Message
     
    i would agree, but as soon as it is confirmed, I will be tripling my long term position.
    20 Aug 2014, 03:51 PM Reply Like
  • boiindamusic
    , contributor
    Comments (2) | Send Message
     
    Im pretty much dumb about it...
    is it buy or sell?
    20 Aug 2014, 03:03 PM Reply Like
  • WisPokerGuy
    , contributor
    Comments (1278) | Send Message
     
    Most of the big banks are undervalued when compared to their book value. BAC, C and JPM. Insurance companies too like AIG.

     

    Despite all the noise from the posters above, to me the question of whether to own these stocks boils down to this simple question:

     

    If you think the economy (mainly housing) will continue to slowly improve and if you think interest rates are slowly going to rise, that will be good for all financial institutions including BAC. Then you should buy here. If you think the economy will fall into recession once the FED stops QE purchases, well then everything will probably fall and you'll get a better entry point on virtually every stock out there. I believe the former and own both BAC and Citi because they are both SEVERLY undervalued when measured to their book value and should BOTH be trading significantly higher in the next 12-18 months.

     

    I'm sure I'll get ripped for this answer by the Anti-FED crowd, but to me it's a pretty clear black-and-white scenario. I'm long BAC, C and JPM and would probably buy more right here if I wasn't already fully invested.
    20 Aug 2014, 05:26 PM Reply Like
  • John McCoy
    , contributor
    Comments (298) | Send Message
     
    Agree 100%, and am VERY long BAC and JPM, along with BRK-B and MKL in the insurance space.
    20 Aug 2014, 05:45 PM Reply Like
  • overunder
    , contributor
    Comments (40) | Send Message
     
    My plan is to wait and see how the stock does over the next week or so presuming the market itself doesn't have a lot of volatility. Once the benefits(?) of the settlement are fully in the stock price, I am finally going to unload the shares I've been holding in one form or another for over 20 years. I think there are many stocks out there with a better future.
    20 Aug 2014, 03:05 PM Reply Like
  • Caludio
    , contributor
    Comments (381) | Send Message
     
    overunder
    most of the people will do just opposite of what you are thinking. this is the time to buy not sell BAC.
    20 Aug 2014, 03:10 PM Reply Like
  • grglga
    , contributor
    Comments (89) | Send Message
     
    Based on my experience when there is capitulation from long term share holders and they throw in the towel , that means it is a buy. Sorry but I have seen it happen over and over. In 1970 secretaries were buying gold coins then gold plummeted, In 1990 doctors were buying real estate and becoming developers re plummeted etc. The opposite is true when they sell.
    20 Aug 2014, 03:28 PM Reply Like
  • Mad Stacks
    , contributor
    Comments (758) | Send Message
     
    It was amusing how they thought they could effectively negotiate with the DOJ. Time to pay the Man and move onward and upward.
    20 Aug 2014, 03:11 PM Reply Like
  • DoowopDave
    , contributor
    Comments (253) | Send Message
     
    Johnny Maestro said it best: "It's The Worst That Could Happen".
    20 Aug 2014, 03:24 PM Reply Like
  • mphill47
    , contributor
    Comments (595) | Send Message
     
    The big hit will be on BAC's bottom line. Institutional buyers will see through it and invest heavily in BAC. Look for close to book by 1st Qtr 2015 (if the mkt holds together till then).
    20 Aug 2014, 04:02 PM Reply Like
  • drgrier
    , contributor
    Comments (239) | Send Message
     
    I doubt that BAC was fully reserved for the $10 Billion. Thus there will be more legal cost written off against this quarter earnings. Hopefully not as much as qtr1 and qtr2.

     

    At least this removes one of the major uncertainties regards BofA. Now folks can concentrate on Banking Operating results for qtr4, 2014 and 2015 which should be fairly good.

     

    Good Luck All....
    20 Aug 2014, 04:11 PM Reply Like
  • WMARKW
    , contributor
    Comments (10766) | Send Message
     
    And who gets the money? Will MBS investors who were duped - get a single dime? No.
    20 Aug 2014, 04:20 PM Reply Like
  • drgrier
    , contributor
    Comments (239) | Send Message
     
    Most of it goes to the DOJ, the fines. This was one of biggest extortions that the DOJ has "pulled off" against the banks.

     

    Now Holder can go to President and get a Big "well done, my friend" while the rest of the Nation suffers.

     

    Good Luck....
    20 Aug 2014, 04:28 PM Reply Like
  • boiindamusic
    , contributor
    Comments (2) | Send Message
     
    so... help for this fool...
    buy or sell?
    20 Aug 2014, 05:06 PM Reply Like
  • cross
    , contributor
    Comments (1370) | Send Message
     
    It's a buy, particularly looking out longer term, two, three years. They will build earnings, build the div. It will move in sync with the economy, which is clearly picking up steam.
    I also recommend Ford here. The next couple of years should see fifty to one hundred percent gains in both.
    20 Aug 2014, 05:24 PM Reply Like
  • drgrier
    , contributor
    Comments (239) | Send Message
     
    IMO, Neither. If you own it, Hold it. Until this is cleared up you might want to gamble on some Jan 2016 leaps, strike $15 or $17. Today the volume in the $17 strike was Huge while the volume in the stock was unimpressive.

     

    Seems there is a lot of betting on the end of 2015 results.

     

    Good Luck...
    20 Aug 2014, 05:28 PM Reply Like
  • trucks321
    , contributor
    Comments (146) | Send Message
     
    There no real demand for anything fed using play money. Wake up America
    20 Aug 2014, 06:56 PM Reply Like
  • kellan
    , contributor
    Comments (144) | Send Message
     
    For a fine like ($17 Billion !!!!), you would think there would be some jail time...
    Per usual no jail time for the anonymous crooks who left B of A shareholders holding the bag.
    It's called a pay-off
    20 Aug 2014, 07:01 PM Reply Like
  • Ronald McDonald
    , contributor
    Comments (56) | Send Message
     
    I was hoping that their would be jail sentences
    20 Aug 2014, 09:31 PM Reply Like
  • In the interest of Fairness
    , contributor
    Comments (3) | Send Message
     
    It is just a hidden wealth tax on financial institutions that the administration can't get passed using legitimate means. On the bright side, at least the money is available to reduce the deficit and make the bailout program seem much more favourable to the taxpayer.
    20 Aug 2014, 10:16 PM Reply Like
  • WMARKW
    , contributor
    Comments (10766) | Send Message
     
    Or it's available to fund off government book activities including....who knows what, things, perhaps like "fast and furious"?
    21 Aug 2014, 06:35 PM Reply Like
  • vireoman
    , contributor
    Comments (1186) | Send Message
     
    I am perpetually mystified when it comes to investors opinions on SA regarding BAC. In the initial aftermath of the Great Recession, the dominant opinion seemed to revolve around why on one was being punished for the excesses related to the crash. Now it seems to be centered on the overbearing power of the government (the "Obama Administration" per Don Dion). As I understand it, the government HAD to resuscitate the mega-banks, given their outsized importance to the US and global economy. Once their survival was assured, it was time for the punishment phase to proceed. Granted, the Fed and previous administrations (both Clinton's and Bush's) and Congress played a role in the financial ugliness of the past decade. However, does anyone want to claim that the most egregious kind of malfeasance and immoral, out-of-control greed weren't primary causes of the economic downfall? I am long BAC and I would like to make lots of money on my investment, but that doesn't mean that those that behaved badly shouldn't be severely punished. Angelo Mozilo, are you listening?
    20 Aug 2014, 10:57 PM Reply Like
  • drgrier
    , contributor
    Comments (239) | Send Message
     
    But how is the DOJ going to get $17 Billion out of Angelo Mozilo and Ken Lewis???

     

    The DOJ is NOT Stupid!!!

     

    As Willie Hutton stated when asked why do you ROB Banks. That is where the MONEY is....
    27 Aug 2014, 10:35 AM Reply Like
  • overunder
    , contributor
    Comments (40) | Send Message
     
    vireoman: And I am perpetually mystified by those who seem to think it is appropriate to punish the secretary whose 401k has a mutual fund invested in BAC. Was she the one with the most egregious kind of malfeasance and immoral greed? Oh, but you say she benefitted. Did she? So maybe the value of her stock ran up 50% over her cost basis after a few years. Does that make her responsible for the financial ugliness? Her stock went to the pits and now may have a pittance of its former value. Isn't that enough? Should she suffer more? How about Ken Lewis and his hear/see/speak no evil BOD? Their losses are a pittance compared to hers. What about the traders? How many of them are in prison? The taxpayers made out like bandits for the whole bailout with the exception of GM. Why must shareholders bare the brunt of the punishment phase?
    21 Aug 2014, 09:22 AM Reply Like
  • funfundvierzig
    , contributor
    Comments (4167) | Send Message
     
    Bilk of America is now firmly established as the leading institution in fraud-mongering in North America in the 21st century! Some honor! Or dishonor.

     

    Investors be wary and beware.

     

    …funfun..
    26 Aug 2014, 06:13 AM Reply Like
  • papayamon
    , contributor
    Comments (1220) | Send Message
     
    Really? Where are you since BAC has started its upward March? Answer, nowhere to be found. We miss your entertainment :).
    26 Aug 2014, 10:55 AM Reply Like
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