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Bank of America Will Pay Almost $17 Billion to Settle Their Mortgage Case

The settlement, announced by Attorney General Eric Holder today, will likely be $9.65 billion in cash and $7 billion in consumer relief. 

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Today, Attorney General Eric Holder is set to announce a whooping $16.65 billion settlement with Bank of America over mortgage fraud. The long-awaited settlement will likely be for $9.65 billion in cash and $7 billion in consumer relief. This is the largest settlement of its kind — more than twice the size of Citigroup's $7 billion deal and substantially higher than JPMorgan Chase's $13 billion settlement. All three deals involved consumer relief.

The settlement was spurred by Bank of America's role in the 2008 financial crisis, specifically in issuing "bad" mortgage-backed securities and failing to disclose the risk associated with them. A civil action has also been filed.

Earlier this summer, Bank of America settled Countrywide's mortgage backed securities issue to the tune of $1.27 billion. During initial settlement discussions, Bank of America made the case that they should not be responsible for the mortgage back securities issues of Countrywide or Merrill Lynch, two companies they purchased after their mortgage problems began. Countrywide was the primary issuer of mortgage back securities.

The Attorney General offered these remarks:

The Department of Justice has reached an agreement with Bank of America totaling over $16.6 billion in penalties and consumer relief.  This constitutes the largest civil settlement with a single entity in history, addressing conduct uncovered in more than a dozen cases and investigations.  And it addresses allegations that Bank of America, Merrill Lynch, and Countrywide each engaged in pervasive schemes to defraud financial institutions and other investors in structured financial products known as residential mortgage-backed securities, or RMBS.

This article is from the archive of our partner The Wire.