By Peter Rudegeair
Feb 25 Bank of America Corp said on
Tuesday that federal investigators are looking into whether the
bank violated requirements of a U.S. government housing program.
The civil division of the Brooklyn U.S. Attorney's Office
for the Eastern District of New York is investigating Bank of
America's compliance with the rules of the Federal Housing
Administration's Direct Endorsement Program, according to the
bank's annual report with the U.S. Securities and Exchange
The Charlotte, North Carolina-bank also said in the filing
that government authorities in North America, Europe and Asia
are investigating the bank's conduct and practices in
foreign-exchange markets as part of a broader industry inquiry.
Under the FHA's Direct Endorsement Program, mortgage lenders
like Bank of America are given the authority to approve home
loans that the federal government then insures without further
review. If the mortgage defaults and it is later determined that
the lender did not follow FHA underwriting standards, the FHA
can then demand to be reimbursed for any losses.
Spokesmen for Bank of America and the Brooklyn U.S.
Attorney's Office declined to provide additional details on the
The program has been at the center of many cases brought by
the Manhattan U.S. Attorney's office. In 2012, Citigroup Inc
agreed to pay $158.3 million and Deutsche Bank AG
agreed to pay $202.3 million to settle related
JPMorgan Chase & Co agreed in early February to pay
$614 million to settle claims that it defrauded the FHA and the
Department of Veterans Affairs by making sub-standard mortgage
In February 2012, Bank of America agreed to $1 billion in
payments to the federal government to settle claims that its
Countrywide home loan subsidiary made FHA-insured mortgages to
unqualified borrowers. The settlement covered FHA loans made
prior to April 30, 2009.
Bank of America also boosted its estimate for possible
losses on top of what it has already put aside to cover
litigation expenses. The bank said in the filing that litigation
losses may exceed reserves by up to $6.1 billion, up from an
estimate of $5.1 billion at the end of the third quarter.