Bank of America settles mortgage probes for $16.65 bln

Thu Aug 21, 2014 9:15am EDT

Aug 21 (Reuters) - Bank of America Corp has reached a $16.65 billion settlement with U.S. regulators to settle charges that it misled investors into buying troubled mortgage-backed securities.

The settlement announced on Thursday by the U.S. Department of Justice calls for the second-largest U.S. bank to pay a $9.65 billion cash penalty, and provide about $7 billion of relief to struggling borrowers.

It is expected to resolve the vast majority of the Charlotte, North Carolina-based bank's remaining liabilities tied to its purchases of Countrywide Financial Corp, once the nation's largest mortgage lender and Merrill Lynch & Co.

Bank of America said the accord is expected to reduce third-quarter earnings by about $5.3 billion before taxes, or about 43 cents per share after taxes. (Reporting by Aruna Viswanatha in Washington and Jonathan Stemple in New York; Editing by Susan Heavey)

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