The U.S. Department of Justice is asking Bank of America Corp (BAC.N) to pay more than $13 billion to settle allegations the bank overstated the quality of mortgage bonds it sold during the housing bubble, according to Bloomberg News.
Sources familiar with that matter told Reuters on Thursday that discussions were in very early stages, and at least one source said the $13 billion figure is not currently on the negotiating table. CNBC News reported that Bank of America's mortgage securities settlement could exceed $10 billion.
Any settlement with the Justice Department would be in addition to the $9.5 billion accord it reached with the Federal Housing Finance Agency to resolve similar litigation over residential mortgage securities, according to Bloomberg News. A possible agreement to resolve federal and state investigations could come within the next two months, according to people familiar with the matter cited by Bloomberg.
A Bank of America spokesman declined to comment. A Department of Justice spokesman was not immediately available for comment.
The second-largest U.S. bank faces multiple government probes over the underwriting, sale and securitization of residential mortgage bonds before the financial crisis.
The bank said in an annual regulatory filing that the staff of the New York Attorney General's office told Bank of America they intended to file an action as a result of their inquiry into its mortgage securities practices. A U.S. Attorney's office advised Bank of America it would recommend the Justice Department bring a civil case against its affiliates over mortgage bonds, the bank said in its filing.
(Reporting by Aruna Viswanatha, Karen Freifeld and Peter Rudegeair; Editing by Meredith Mazzilli and Lisa Shumaker)