Bank of America Corp. said that it reached a settlement with Freddie Mac to resolve claims stemming from residential mortgage loans the bank sold to Freddie, the Wall Street Journal reported today. The bank plans to pay Freddie Mac about $404 million to resolve all outstanding and potential mortgage repurchase and other claims related to loans sold to Freddie from 2000 to 2009, and to compensate Freddie for some past losses and potential future losses. The payments are fully covered by existing reserves, the bank said. Freddie had $1.4 billion in Bank of America repurchase demands as of Sept. 30, according to federal filings, the largest for any bank. That represented around 42 percent of all of Freddie's outstanding repurchase demands.
