Fannie, Freddie Get $3.3 billion in Settlements
By Clifford Marks

Government-sponsored housing giants Fannie Mae and Freddie Mac will receive more than $3 billion from settlements with Ally Financial and Bank of America over claims that Ally and Countrywide Financial, now owned by Bank of America, peddled thousands of home mortgages with inaccurate information.  The settlements resolve disputes that could have forced Bank of America and Ally to buy back billions of dollars worth of bad mortgages — an outcome that some feared would damage the stability of the financial system if similar demands from private investors followed and proved successful. Bank of America purchased mortgage servicer Countrywide in 2008. The company said its agreement reached with the mortgage giants resolves claims on all loans Countrywide sold Freddie Mac through 2008 and “substantially resolves” claims on those sold to Fannie Mae.  However, the settlement does not involve the bank’s ongoing disputes with private companies and other entities, such as bond fund PIMCO. In October, PIMCO headlined a group of investors demanding that Bank of America repurchase $47 billion in loans.  What today’s settlement may mean for those claims is unclear. The deal could, for example, set a damaging precedent for the banks in their negotiations with private claimants. But according to Karen Shaw Petrou, managing partner of Federal Financial Analytics, there’s so much variation in the affected loans that it’s difficult to extrapolate from the government’s agreement.  However, Petrou said, there was one thing that was quite clear. “Certainly, none of the banks involved are going to roll over,” she said. “The amounts here are very large.”