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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

 

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Wed, 12/15/2010 - 17:50 | 809582 SilverRhino
SilverRhino's picture

Looks like it boils down to who has more judicial pull, PIMCO or BoA.  

 

Wed, 12/15/2010 - 17:57 | 809612 DoChenRollingBearing
DoChenRollingBearing's picture

SilverR, yes indeed.

Who has the better corruption levers:

Bank of Amerika

or

PimpCo?

Hmm, that´s a toughie.  We´ll just have to wait and see.

Wed, 12/15/2010 - 17:57 | 809617 TheProphet
TheProphet's picture

Did you forget the NY Fed?

Wed, 12/15/2010 - 18:28 | 809712 Bob
Bob's picture

Yeah, it looks like NY Fed + Pimpco = short end of stick.

Wed, 12/15/2010 - 19:04 | 809823 pamriallc
pamriallc's picture

not going to happen.  like madoff whose investors were asked to forgive their "ill gotten gains" as part of their 25 year affiliation, PIMCO will be asked to leave the room due to their unprecedented gains over the years while interest rates plummeted and they created excess returns by leveraging their position in the debt markets.

18-24 months ago we used to own a lot of BAC preferred equity and finally we're now selling the corp. debt plus the TRUP shares and wading into the common equity at 60% of book value.  it's a max 3.5% position vs an entire portfolio that if we're right--- and we think so...  could be a 10-12% position in 5 years due to appreciation.  they're going to be fully hedged as interest rates creep back up and as such, they're going to make a lot of money.

don't blame gross for trying, but when the BAC attorneys get fired up, PIMCO will sadly take far less away than they intended.

Shawn A. Mesaros, Pamria, LLC

Wed, 12/15/2010 - 19:14 | 809857 traderjoe
traderjoe's picture

How are you calculating BV - with their financial statements? Hahaha.

Thu, 12/16/2010 - 00:03 | 810674 IQ 145
IQ 145's picture

 yeah; god only knows; a crystal ball would work just as good.

Wed, 12/15/2010 - 17:50 | 809583 Ragnarok
Ragnarok's picture

Good, I was beginning to think people forgot.

Wed, 12/15/2010 - 17:52 | 809591 Id fight Gandhi
Id fight Gandhi's picture

And stock is up ah on this? Pfft.

Extend and pretend. Bankstas!

Wed, 12/15/2010 - 17:53 | 809598 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Dum dee dum dum...dum dee dum dum DUMMMB!

Wed, 12/15/2010 - 17:55 | 809603 Cdad
Cdad's picture

Ug,

Really, Tyler.  Would it kill you to do an article on the new trend in self-gifting?  You could include some sweet footage of Victoria Secret models, as apparently that is the epicenter of self-gifting.

You see, then I could finally have my already very late morning constitutional.  But no...on to criminal syndicate Wall Street bank issues.

 

Wed, 12/15/2010 - 18:25 | 809702 SheepDog-One
SheepDog-One's picture

I wish I could self gift myself a couple Victorias Secret models!

Wed, 12/15/2010 - 17:59 | 809611 mynhair
mynhair's picture

BAC should be up at least 3% tomorrow on this news. 

What, somebody wants to sell those shares I shorted?

Wed, 12/15/2010 - 18:06 | 809638 Cdad
Cdad's picture

mynhair,

Of course it would rally on news that would call into question its very solvency as a criminal syndicate Wall Street bank...of course.  It is all part of what needs to happen, at least in the VERY short term, as said criminal syndicate Wall Street bankers arbitrage to death everything on the surface of the planet on their way to the bank with $100 million in bonus payments.  Think of it as economic stimulus.

But alas, in the end, it WONT be good for BAC...and I am one of many, I expect, that believe BAC WILL NOT SURVIVE in the long run...because it is so rank with corruption and law breakers that its meat is literally falling off those zombie bones.

Wed, 12/15/2010 - 18:08 | 809644 traderjoe
traderjoe's picture

Cdad - enjoyed your posts of late. 

I too think BAC is toast.

Wed, 12/15/2010 - 18:18 | 809681 Cdad
Cdad's picture

Thank you Joe,

I will probably be joining you on that BAC short position before long.  I am just waiting for my ship to come in on being negative on $9 burritos and even more negative on stocks with PEs over 250...which still makes me lolololololol.  Also, I have to wait for the zombie drug company stock I'm short, which cannot get any of its drug ideas past the FDA...which I thought was bad news...I'm still waiting for it to discover that it has a bleak future.

And since the market has arrived at an inflection point, as well as having arrived at being priced for stupid, I expect I'll be posting a lot until the truth of things somehow gets broader traction.  This IF Tyler slows down even just a little, tossing a bone here or there, something with racy women in it that I can skip...so that I can rehydrate and tend to other necessary bodily functions...sheesh.

But we'll see....

Good luck out there, Joe.

Cdad

Wed, 12/15/2010 - 18:27 | 809706 SheepDog-One
SheepDog-One's picture

$9 burritos...lmao.

Wed, 12/15/2010 - 18:27 | 809710 SheepDog-One
SheepDog-One's picture

Come ON Mr Market!! Just ONE more tiny wafer thin mint hmmmmm???
http://www.youtube.com/watch?v=MlfcF1I5e_g

Wed, 12/15/2010 - 18:44 | 809758 traderjoe
traderjoe's picture

Priced for stupid. Love it. Full disclosure, I actually like Chipotle's tacos, and can escape out of there for sub-$6. The stock is simply baffling though.

I'm done with trading. I picked my moniker as a dummy name that I created to flame PALM stock on the Google Finance boards where the pump monkey's thought the PRE would beat the iPhone. Oops.

I've been around the markets for 20+ years. I've never seen it so stoopid. It's all the theater of the absurd now. On a day when riots are breaking out all around Euro-land, the market drops all of 21 dow points.

I'm somewhat convinced when BAC goes to $0 during the upcoming bank holiday, I'm not so sure having shorts will help (IMHO). You'll only get paid back in worthless FRN's. Even though I think shorting the 30-year UST would be the trade of the century - I just don't think you'll get paid off when you win. Sure missed a move recently though - a 2x on a short UST in 6-8 weeks or so. I'm positioning for the other-side. Some might call me a doomer. :)

I'm removing my consent from the system. Downsizing, converting to physical PM's, and educating the people when I can. The banksters don't get to skim off my FRN's no more.

Cheers!

Wed, 12/15/2010 - 19:12 | 809849 Cdad
Cdad's picture

Joe,

I was on the TBT during this bond insanity...but I pulled off it too soon because the vol was pretty wild.  That is some bad mojo forming in the bond market.

As for those really expensive burritos, ummmm, well the problem of input costs are about to meet the problem of MASSIVE INSTITUTIONAL EXPECTATIONS only to be resolved in thin tape...which I am quite sure is going to be a touch problematic since I don't think they have ANY pricing power.  As for baffling, I just pull up a KKD chart to remind myself of where it is headed.  Enjoy the tacos...I won't hold it against you.

And as you correctly point out, the only chart that needs really close monitoring right now is the EUR/USD chart.  I noticed Nic just featured it.  That is all anyone needs to know about the rest of this week.  'Cause I don't think flaming Greek people [literally] on the streets is "Priced in"...despite my comment otherwise in another thread.

We live in interesting times, Joe.

Thu, 12/16/2010 - 02:05 | 810866 StychoKiller
StychoKiller's picture

Kinda gives new meaning to "Hot Buns" don't it?! :>D

Wed, 12/15/2010 - 18:13 | 809669 hdunn2
hdunn2's picture

Ridiculous. Just like last week when the settlement over munis came down and a HUGE rally followed..

Except this time some tiny $100m settlement won't make the problem go away.

Peoples ignorance and stupidity makes me sick.

 

 

Wed, 12/15/2010 - 18:14 | 809672 erik
erik's picture

It is up 2.5% in after hours so far

Wed, 12/15/2010 - 18:11 | 809656 ewmayer
ewmayer's picture

When I saw Exhibit A, for a brief moment I thought ZH had gotten a leaked copy of page 1 (of 207) of the Fed's MBS holdings summary.

Wed, 12/15/2010 - 18:11 | 809658 Spitzer
Spitzer's picture

Peter Schiff just had a fairly good scrap on Fast Monkey.

Mellisa Lee looks like a Japanies call girl today, yum yum.

Wed, 12/15/2010 - 18:55 | 809789 downrodeo
downrodeo's picture

y'know, i'm surprised that CNBC has never come out with a calendar. the money they could make would be enough to... well, i'm sure they could do something with it...

Wed, 12/15/2010 - 18:12 | 809660 erik
erik's picture

Calculated Risk has a great piece on how Republicans are trying to blame the entire financial crisis on the government.  They are trying to get the words "Wall Street" and "shadow banking" removed from the final report.

http://www.calculatedriskblog.com/2010/12/commentary-subprime-thinking.html

Criminal.

Wed, 12/15/2010 - 19:34 | 809950 Greenweather
Greenweather's picture

That's simply repulsive.

Wed, 12/15/2010 - 22:07 | 810401 Ned Zeppelin
Ned Zeppelin's picture

Republicans prove time and again they are the willing oral pleasure providers to the wealthy elite.  They should wear Brooks Brothers bibs considering all the work they do. 

Wed, 12/15/2010 - 18:21 | 809688 jal
jal's picture

 

The fraud was perpetuated on all those juicy funds. The poor j6p was used by the banksters to enable the fraud. The funds had all the money for the taking NOT your dumb neighbor. 

 

Its time for the fund mgr to hire an evaluator to go around to all of "their" properties and do a PHYSICAL inventory and evaluation of THEIR HOLDINGS. 

 

GEE! They might find out that they are holding an empty bag and that they are entitled to "putbacks" and that the banksters will have fines and taxes to pay.

jal

 

Wed, 12/15/2010 - 18:29 | 809717 max2205
max2205's picture

Will the fed sneak um a check through aig? BAC should scream when this is done. Right?!?

Wed, 12/15/2010 - 18:31 | 809718 erik
erik's picture

BAC settlement = acknowledgement of guilt

Is the justice department paying attention?

Wed, 12/15/2010 - 18:40 | 809749 jal
jal's picture

 

RELATED

 

http://livinglies.files.wordpress.com/2008/12/greenwich-investor-complaint-against-countrywide-describing-securitization-in-simple-terms.pdf 

Dated: New York, New York 

December 1, 2008 

SUPREME COURT OF THE STATE OF NEW YORK 

COUNTY OF NEW YORK 

GREENWICH FINANCIAL SERVICES 

DISTRESSED MORTGAGE FUND 3, LLC, 

and QED LLC, on behalf of themselves and all 

other persons similarly situated, 

Plaintiffs, 

-against- 

COUNTRYWIDE FINANCIAL 

CORPORATION, COUNTRYWIDE HOME 

LOANS, INC., and COUNTRYWIDE HOME 

LOANS SERVICING LP, 

Defendants. 

Index No. 

COMPLAINT 

 

Plaintiffs allege: 

1. To settle allegations of widespread predatory lending made against it by 

the Attorneys General of atleast 15States, Countrywide Financial Corporation has 

agreed to reduce payments due on hundreds of thousands of mortgage loans by a total of 

up to $8.4 billion. Most of these loans are owned not by Countrywide, but rather by trusts 

to which Countrywide sold the loans in the process of securitization. To pay Countrywide 

for the loans, those trusts in turn sold securities (often called “certificates” and sold in 

different classes or “tranches”) to investors. Countrywide plans not to absorb the $8.4 

billion reductionin mortgage payments itself (even though it was Countrywide’s own 

conduct of which the Attorneys General complained in the proceedings that Countrywide 

has now settled), but rather to pass most or all of that reduction on to the trusts that 

purchased mortgage loans from Countrywide. If the trusts are forced to absorb the reduction in payments occasioned by Countrywide’s settlement of the allegations against 

it, then the value of the securities that those trusts sold to investors will decline. 

2. This action relates to two series of Countrywide securitizations known as 

the CWL series and the CWALT series. 

3. Bythis action, plaintiffs seek a declaratory judgment that, under the 

agreements that govern the administration of the loans that Countrywide sold to trusts in 

these two series of securitizations (including the trust that issued the securities that 

plaintiffs own), Countrywide is required to purchase every mortgage loan on which it 

agrees to reduce the payments.

 

KEEP READING

 

Wed, 12/15/2010 - 19:09 | 809831 beastie
beastie's picture

So the bottom line is BAC will have to step up the foreclosures in order to cover it's ass with enough cash flow for put backs and every destitute pleb in this country has to foot the bill again. 

Banks extend and pretend with assistance from Ben and Timmy. How is the destitute public going to extend and pretend? 

Talking with a real estate lawyer yesterday and he gave me two horror stories he is dealing with. They are personal friends as he doesn't normally deal with the seedier side of real estate.

2006 One million dollar home the banks wouldn't allow a short sale on eventually went into foreclosure as the home owner just gave up trying to deal with the bank. The pipes froze last winter. As it stands right now it's a complete gut job and worth 500K on a good day. Except the bank is still looking for at least 800K on it. The homeowner bought a new place in Florida. 

Second, is a personal bankruptcy after homeowner signed off in 2006 for a 680K mortgage. The home owner swore they were responsible with the 180K they took out in quity. They paid their mortgage for another 4 years @ a readjusted rate of 9% and paid off their credit cards. Money gone. House gone and the guy is pushing the Lawyer to hurry up and file the bankruptcy because he wants to buy a new car. Livin' the American dream.

So two short term gains for the banks have ruined a few FICO scores and two houses sit empty and will be worth only the land value after a harsh winter. 

The smart people will thrive or at least survive in this environment. The rest will be bled dry of all assets while they try to muddle through. 

Wed, 12/15/2010 - 19:29 | 809927 tony bonn
tony bonn's picture

boa has the most arrogant asshole staff in  the universe....i would greet its demise with glee....

fuck boa.

Wed, 12/15/2010 - 19:30 | 809931 0321_GUY
0321_GUY's picture

This is an easy one.  PIMPCO is owned by Allianz, a big German company.

https://www.allianz.com/en/about_allianz/regions_countries/americas/usa/page1.html

  "In North America several companies with specialized expertise operate under the roof of the Allianz Group. Property & Casualty Insurance is provided by Fireman's Fund, Life Insurance and Healthcare Risk Management by Allianz Life, and Asset Management by Allianz Global Investors' network of companies, such as PIMCO, Nicholas-Applegate Capital Management and Oppenheimer Capital."

I'll bet on black here with PIMCO aka D/B/A Allianz

Wed, 12/15/2010 - 21:34 | 810313 greenewave
greenewave's picture

Tired of being SCREWED by the FEDERAL GOVERNMENT and LIED to by PRESIDENT OBAMA, BERNANKE, JAMIE DIMON and the other host of CRONIES??

Then Watch the YouTube Video “AMERICAN DREAM DEAD ~ DENIAL, THEN PANIC” at (http://www.youtube.com/watch?v=7PFqAoqrPOs)

Anonymous-

It’s time you STOPPED getting SCREWED by the BIG RED WHITE and BLUE !!

Wed, 12/15/2010 - 22:04 | 810391 Ned Zeppelin
Ned Zeppelin's picture

Things really will get interesting as soon as the sharks realize there are no more prey, and have to instead turn on each other. 

Thu, 12/16/2010 - 00:49 | 810760 Everyman
Everyman's picture

+100000

That is what I have been waiting for.  IF all of them have the money, then they have to start screweing each other.

Wed, 12/15/2010 - 23:22 | 810572 Fearless Rick
Fearless Rick's picture

Money is the last enemy that shall never be subdued. While there is flesh there is money or the want of money, but money is always on the brain so long as there is a brain in reasonable order.Samuel Butler

Wed, 12/15/2010 - 23:25 | 810578 Fearless Rick
Fearless Rick's picture

Methinks Bank of America may be in need of a name change soon. Might I suggest, "Bank that Screwed America"

Thu, 12/16/2010 - 00:08 | 810687 Buck Johnson
Buck Johnson's picture

Help me with this, I'm very confused.  Why is PIMCO and the US govt. via Fannie and Freddy and a few others going after BOA for redemptions.  They would have to know that BOA is essentially insolvent, why force this into the open bringing the system down? 

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