BofA gets more time for talks over soured loans


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CHARLOTTE, N.C. (AP) — Bank of America and a group of investors demanding the bank buy back soured mortgages it sold to them have agreed to extend talks aimed at resolving their dispute.

The bank and a law firm representing the investors said Wednesday they would go beyond a 60-day discussion period triggered by a letter sent to the bank in mid-October. The bank did not say whether there was a new time limit set on the talks.

Investors appeared to welcome the prospects of a negotiated settlement to the standoff and the possibility of the bank avoiding a costly, and potentially messy, legal battle. Following Bank of America’s statement late Wednesday, its shares added 25 cents to $12.54 in aftermarket trading. The stock had slipped 11 cents to $12.29 during the regular session.

As the housing boom raged, many lenders sold off mortgages to investment banks that pooled the loans into securities and sold them to investors. However, in the housing and economic crisis that followed, many homeowners ended up defaulting on their loans, saddling investors with securities backed by bad loans.

Now, some of those investors are demanding that the lenders that sold them the now-troubled mortgages buy the loans back — a practice known as “put-backs” on Wall Street.

Bank of America had previously rejected the claims and said last month it would not buy back bad mortgages, even as both sides engaged in talks.

The announcement that we’re making today is consistent with our strategy all along that if there is a valid defect, Bank of America will act responsibly and buy back the loan, and in case of no evidence of a valid defect we will defend the interests of the company and of our shareholders,” said Jerry Dubrowski, a BofA spokesman.

The group of eight investors seeking put-backs from Bank of America includes the Federal Reserve Bank of New York, Freddie Mac, Pimco Investment Management and Blackrock Financial Management.

The investors own interests in a slate of 115 transactions with an original principal balance of $104 billion. Now the balance is $46 billion.

The investors want Bank of America to buy back defaulted mortgages made by its Countrywide unit, which the Charlotte-based bank acquired in July 2008.

They argue that Countrywide’s practice of modifying loans found to have faulty paperwork or those written outside of normal underwriting standards breached signed agreements with the investors.

By continuing to service bad loans rather than speeding up foreclosures, the group claims, Countrywide ran up servicing fees, enriching itself at the expense of investors.

Bank of America, however, has described the loan modifications as the “proper response to an unprecedented housing crisis and in furtherance of the stated policy of the federal government.”

It called claims of poorly handled loans baseless.

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From: http://us.rd.yahoo.com/finance/news/rss/story/*http://us.rd.yahoo.com/finance/news/topnews/*http://biz.yahoo.com/ap/101215/us_bank_of_america_mortgage_buybacks.html

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