Bank of America in $8.5B mortgage settlement

[June 29, 2011]  NEW YORK (AP) -- Bank of America and its Countrywide unit will pay $8.5 billion to settle claims that the lenders sold poor-quality mortgage-backed securities that went sour when the housing market collapsed.

The Charlotte, N.C., bank says the settlement with 22 investors is subject to court approval and covers 530 trusts with original principal balance of $424 billion.

As a result of the settlement, Bank of America put its second-quarter loss at $8.6 billion to $9.1 billion. Excluding the settlement and other charges, the bank expects to post a quarterly loss of $3.2 billion to $3.7 billion.

Shares of Bank of America Corp. jumped 4 percent before the market opened, with investors happy that the bank can put very big uncertainty behind it.

[Associated Press]

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