August 27, 2014
By Neal Tepel
New York, NY – Attorney General Eric T. Schneiderman announced a $16.65 billion settlement with Bank of America for their misconduct that led to the crash of the housing market.
Bank of America acknowledged it made serious misrepresentations to the public arising out of the packaging, marketing, sale and issuance of residential mortgage-backed securities (RMBS) by Bank of America, as well as by Countrywide Financial and Merrill Lynch, institutions that Bank of America acquired in 2008. The resolution also requires Bank of America to provide relief to underwater homeowners, distressed borrowers, and affected communities.
“Since my first day in office, one of my top priorities has been to pursue accountability for the misconduct that led to the crash of the housing market and the collapse of the American economy,” said Attorney General Schneiderman. “This historic settlement builds upon our work bringing relief to families around the country and across New York who were hurt by the housing crisis, and is exactly what our working group was created to do. The frauds detailed in Bank of America’s statement of facts harmed countless of New York homeowners and investors.”
A report by one of Merrill Lynch’s due diligence vendors found that from the first quarter of 2006 through the second quarter of 2007, 4,009 loans that were part of loan pool samples reviewed by the vendor were not in compliance with underwriting guidelines or applicable laws and regulations. These toxic pools of loans were sold illegally to investors by Merrill Lynch. Investors were misled into purchasing defective securities.
The settlement includes an agreed-upon statement of facts that describes how Bank of America, Merrill Lynch and Countrywide sold mortgages that were defective or otherwise ineligible for sale. This conduct, along with other inappropriate and illegal activities by banks throughout the USA, contributed to the financial crisis that caused thousands into bankruptcy.