Mortgage-backed securities continue to plague Bank of America (BAC), the major lender that acquired subprime giant Countrywide during the financial crisis.
The bank admitted in a securities filing this week that the New York Attorney General is currently conducting an investigating into Bank of America’s purchase, securitization and underwriting of mortgage loans and mortgage-backed securities.
As of today, the bank said it has provided documents and testimony related to the investigation.
Furthermore, BofA said it’s facing a Securities and Exchange Commission investigation related to Merrill Lynch’s risk control, valuation, structuring, marketing and purchase of CDOs.
Bank of America added that put-back risk tied to MBS is still a concern. Put-back litigation occurs when an insurer or other party that relied upon representations and warranties made in MBS contracts backed by mortgages file a claim or suit asking for reimbursement on losses tied to soured home loans.
BofA says as of Dec. 31, the total notional amount of its unresolved reps and warranties repurchase claims is $28.3 billion, compared to $12.6 billion in December 2011.
“In addition to repurchase claims, we receive notices from mortgage insurance companies of claim denials, cancellations or coverage rescission and the number of such notices has remained elevated,” BofA wrote.
Apparently the bank also is dealing with unresolved mortgage insurance rescission filings.
“As of December 31, 2012, 68% of the MI rescission notices we have received have not yet been resolved,” BofA wrote in its SEC filing. “The FNMA Settlement clarified the parties’ obligations with respect to MI, including establishing timeframes for certain payments and other actions, setting parameters for potential bulk settlements and providing for cooperation in future dealings with mortgage insurers.”
