Freddie Mac: Incompetence Clouded Our Bank of America Settlement
The FHFA has discovered that Freddie Mac used a flawed analysis when taking a $1.35 billion settlement from Bank of America (NYSE:BAC). According to a report by the inspector general of the FHFA, this will increase the probable losses in Freddie Mac’s portfolio of loans.
The report also says that the settlement was accepted over objections made by a senior examiner at the agency. Freddie Mac executives did not want to risk the relationship with Bank of America (NYSE:BAC).
Steve A. Linick, the inspector general who oversaw the report, said, “An effective mortgage repurchase process is critical in limiting the enterprises’, and ultimately, the taxpayers’ exposure to credit losses resulting from the financial crisis. F.H.F.A. and Freddie Mac must do more to ensure that high-dollar settlements of repurchase claims are accurately estimated and in the best interests of taxpayers.”
Bank of America’s (NYSE:BAC) stock is up 2.73% to $6.78 on the news. Shares are down 49.21% year to date. The stock has traded in a 52-week range between $6 and $15.31.