BofA To Extend Discussions With Pimco, New York Fed, Seeking Settlement Over $47 Billion In Putback Claims

Tyler Durden's picture

After it was earlier announced by the WSJ that BofA was in settlement discussions with the various parties seeking putbacks on $47 billion worth of mortgages, the bank has just released an statement that while there is no settlement imminent, the bank is merely extending the period of negotiation, which started on October 18 and had a 60 day duration. This is not surprising: after all the bank has a mere $872 million in amounts reserved for putbacks. This amount will be laughable should even 10% of the total amount sought to be put to BofA be formally repurchased by the undercapitalized bank.

Here is the WSJ's earlier announcement:

 Bank of America  Corp., after vowing to fight requests that it repurchase certain loans, has begun potential settlement discussions with some of its largest mortgage investors, according to people familiar with the situation.

The group discussing a possible settlement with the nation's largest bank as measured by assets includes the Federal Reserve Bank of New York, government-owned mortgage company Freddie Mac, BlackRock Inc. and Allianz SE's Pacific Investment Management Co., or Pimco, a unit of Allianz SE.

The approach appears to be a major shift in strategy for Chief Executive Officer Brian Moynihan, who in November pledged to engage in "day-to-day, hand-to-hand combat" on investor requests to repurchase flawed mortgages made before the U.S. housing collapse.

This is notable, as, if true, it once again confirms a 180 on the prior lies told by Brian Moynihan:

It isn't known what the possible settlement terms could be. But the mere possibility is a reversal of a stance taken by Mr. Moynihan in October. He told analysts on Oct. 19 that he wasn't interested in a large lump-sum payment to make the repurchase issue go away.

"We're not going to put this behind us to make us feel good," he said. "We're going to make sure that we'll pay when due but not just do a settlement to move the matter behind us."

No U.S. bank is more vulnerable to an array of political and financial threats posed by home-lending woes. Bank of America has more repurchase requests than any of its rivals and it services one of every five U.S. mortgages, many of them picked up by California lender Countrywide Financial Corp. in 2008.

As a reminder, BofA has a tiny $872 million amount reserved for mortgage repurchases. Should the bank be forced to repurchase anything more than just 2% of the claim, it will have to seek substantial income statement impairments in its Q4 earnings.

And full BofA statement:

Counsel for BAC Home Loans Servicing, LP and Gibbs & Bruns LLP on behalf
of certain investors including those who signed the previously reported
October 18, 2010 letter with respect to private label residential
mortgage-backed securitizations, as well as counsel for The Bank of New
York Mellon, as trustee, have agreed to extend any time periods
commenced by the October 18 letter. This extension will permit the
parties to continue constructive dialogue around the concerns raised.
The agreement covers all of the securitizations listed on the attached
Exhibit A. The claims and defenses of all parties are preserved.

Exhibit A
                                           
CWALT
2004-14T2
   
CWALT
2005?24
   
CWALT
2006?OC8
   
CWALT
2007?HY5R
   
CWHL
2005?30
   
CWHL
2007?HYB2
   
CWL
2005?9
   
CWL
2006?9
                                           
CWALT
2004-29CB
CWALT
2005?32T1
CWALT
2006?14CB
CWALT
2007?J2
CWHL
2005?9
CWHL
2007?J1
CWL
2005?AB2
CWL
2006?BC2
                                           
CWALT
2004-35T2
CWALT
2005?35CB
CWALT
2006?20CB
CWALT
2007?17CB
CWHL
2005?HYB3
CWHL
2007?J3
CWL
2005?AB3
CWL
2006?BC3
                                           
CWALT
2004-J6
CWALT
2005?36
CWALT
2006?41CB
CWALT
2007?23CB
CWHL
2005?HYB9
CWHL
2007?12
CWL
2005?AB4
CWL
2006?BC4
                                           
CWALT
2004?32CB
CWALT
2005?44
CWALT
2006?HY12
CWALT
2007?OA7
CWHL
2005?R3
CWHL
2007?16
CWL
2005?BC5
CWL
2006?BC5
                                           
CWALT
2004?6CB
CWALT
2005?45
CWALT
2006?OA11
CWALT
2008?2R
CWHL
2006?14
CWHL
2008?3R
CWL
2005?IM1
CWL
2006?SD1
                                           
CWALT
2004?J1
CWALT
2005?56
CWALT
2006?OA16
CWHL
2004?13
CWHL
2006?15
CWL
2004?SD1
CWL
2006?S9
CWL
2006?SD3
                                           
CWALT
2005?16
CWALT
2005?57CB
CWALT
2006?OA17
CWHL
2004?HYB2
CWHL
2006?20
CWL
2004?SD2
CWL
2006?10
CWL
2006?SD4
                                           
CWALT
2005?19CB
CWALT
2005?64CB
CWALT
2006?OA6
CWHL
2004?HYB5
CWHL
2006?3
CWL
2004?SD3
CWL
2006?12
CWL
2006?SPS2
                                           
CWALT
2005?48T1
CWALT
2005?72
CWALT
2006?OA9
CWHL
2004?HYB6
CWHL
2006?HYB1
CWL
2004?SD4
CWL
2006?15
CWL
2007?10
                                           
CWALT
2005?53T2
CWALT
2005?73CB
CWALT
2006?OC10
CWHL
2004?22
CWHL
2006?J4
CWL
2005?12
CWL
2006?16
CWL
2007?4
                                           
CWALT
2005?59
CWALT
2005?74T1
CWALT
2006?OC2
CWHL
2004?25
CWHL
2006?OA4
CWL
2005?10
CWL
2006?19
CWL
2007?2
                                           
CWALT
2005?65CB
CWALT
2005?81
CWALT
2006?OC4
CWHL
2004?29
CWHL
2006?9
CWL
2005?11
CWL
2006?2
CWL
2007?5
                                           
CWALT
2005?6CB
CWALT
2005?AR1
CWALT
2006?OC5
CWHL
2004?HYB9
CWHL
2006?HYB2
CWL
2005?13
CWL
2006?20
CWL
2007?6
                                           
CWALT
2005?82
CWALT
2005?J5
CWALT
2006?OC6
CWHL
2005?J1
CWHL
2006?HYB5
CWL
2005?16
CWL
2006?22
CWL
2007?7
                                           
CWALT
2005?85CB
CWALT
2005?J9
CWALT
2006?OC7
CWHL
2005?11
CWHL
2006?J2
CWL
2005?2
CWL
2006?24
CWL
2007?9
                                           
CWALT
2005?14
CWALT
2006?21CB
CWALT
2007?15CB
CWHL
2005?14
CWHL
2006?OA5
CWL
2005?4
CWL
2006?25
CWL
2007?BC1
                                           
CWALT
2005?21CB
CWALT
2006?23CB
CWALT
2007?22
CWHL
2005?18
CWHL
2006?R2
CWL
2005?5
CWL
2006?26
CWL
2007?BC2
                                           
CWALT
2006?39CB
CWALT
2007?5CB
CWHL
2005?19
CWHL
2007?10
CWL
2005?6
CWL
2006?3
CWL
2007?BC3
                                           
CWALT
2006?46
CWALT
2007?7T2
CWHL
2005?2
CWHL
2007?11
CWL
2005?7
CWL
2006?5
CWL
2007?QH1
                                           
CWALT
2006?OA21
CWALT
2007?8CB
CWHL
2005?3
CWHL
2007?14
CWL
2005?8
CWL
2006?7
CWL
2007?S3
                                           

Bank of America