Bank of America pays $8.5 billion in mortgage settlement

“We will continue to act aggressively, and in the best interest of our shareholders, to clean up the mortgage issues largely stemming from our purchase of Countrywide.”

The investors argued that Countrywide, which Bank of America purchased in 2008 for $4 billion, continued servicing bad loans and increasing servicing fees, enriching the firm over the investors.

Bank of America has denied those claims.

The settlement, subject to court approval, covers 530 mortgage trusts with an original loan balance of $424 billion, the bank said. 

As a result of the settlement, Bank of America put its second-quarter losses 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, according to a statement. 

The agreement follows a $3 billion deal announced in January to resolve similar claims from Fannie Mae and Freddie Mac, which are owned by the federal government. 

In April, Bank of America said it agreed to pay an estimated $1.6 billion to resolve claims with bond insurer Assured Guaranty Ltd.

Shares of Bank of America improved in early trading as uncertainty surrounding the mortgage issues subsided. 

Other investors include Pimco Investment Management, Blackrock Financial Management, Pacific Investment Management and Goldman Sachs Asset Management.