The Bank of America is in trouble with regards to mis-selling mortgages.
Breaking records, the bank has agreed to pay out $16.65 billion (£9.9 billion) in order to settle charges set against them as a result of their mortgage selling antics.
The issues stemmed from the Bank of America, and involved loans from Countrywide and products sold via Merill Lynch. The banks sold billions of dollars of residential mortgage-backed securities (RMBS) which were backed by loans whose risk and quality were misrepresented when selling them, so not giving customers the full picture in order to sell them more effectively.
The Bank of America bought out Countrywide, another lender, in 2008 for $2.5 billion and has since had to pay additional fines as a result of the smaller company’s past lending habits.
The Justice Department has fined the bank, in the form of a settlement, the largest amount ever made to a single corporate body in American history.
The money, nearly $17 billion will be split between different institutions. Just under $10 billion will go to the Justice Department, six US states and some other government agencies, while the remaining $7 billion will go to consumers struggling with loan payments and towards rejuvenating the property market.
