Bank of America agreed on Monday to pay more than $10 billion to Fannie Mae to settle claims over troubled mortgages that soured during the housing crash, mostly loans issued by the bank's Countrywide Financial subsidiary.
Under the terms of the pact, Bank of America will pay the housing giant $3.6 billion, and will also spend $6.75 billion to buy back mortgages from Fannie Mae at a discount to their original value.
The settlement will resolve all of the lender's disputes with Fannie Mae, removing a major impediment to Bank of America's rehabilitation. The firm had settled its fight with Freddie Mac, the other government-owned mortgage giant, in 2011.
Bank of America also agreed to sell the servicing rights on about $306 billion worth of home loans to other firms.
Bank of America said that it expected the settlement to represent a $2.5 billion hit to its fourth-quarter earnings.
Ben Protess contributed reporting.
