[JURIST] The US Department of Justice (DOJ) [official website] on Thursday announced a $16.65 billion settlement [press release] with Bank of America (BOA) [corporate website] to settle claims that it sold precarious mortgage-backed securities to investors. Of the $16.65 billion, $9.65 billion will be split among federal and state entities while the remaining $7 billion will be paid to consumers harmed by BOA and Countrywide Financial's contribution to the 2008 financial crisis. Attorney General Eric Holder [official profile] said that "This historic resolutionthe largest such settlement on recordgoes far beyond 'the cost of doing business.' Under the terms of this settlement, the bank has agreed to pay $7 billion in relief to struggling homeowners, borrowers and communities affected by the bank's conduct. This is appropriate given the size and scope of the wrongdoing at issue." Associate Attorney General Tony West [official profile] also issued a statement:
At nearly $17 billion, today's resolution with Bank of America is the largest the department has ever reached with a single entity in American history. But the significance of this settlement lies not just in its size; this agreement is notable because it achieves real accountability for the American people and helps to rectify the harm caused by Bank of America's conduct through a $7 billion consumer relief package that could benefit hundreds of thousands of Americans still struggling to pull themselves out from under the weight of the financial crisis.
Mortgage fraud cases continue to be litigated and investigated in the wake of the 2008 financial crisis. In July a federal judge ordered BOA to pay $1.27 billion [JURIST report] for mortgage fraud, which BOA plans to appeal. Earlier this month Citigroup [corporate website] agreed [JURIST report] to pay a $7 billion to settle a federal inquiry into mortgage-backed securities sold by the bank prior to the financial crisis. The US Supreme Court [official website] granted certiorari [JURIST report] in April to hear a mortgage lending case in which Countrywide failed to provide required information and the borrowers attempted to rescind the loan.