Bank of America 'should repurchase $20bn worth of home loans'

14 September 2010

Bank of America should repurchase up to $20 billion worth of home loans sold on the basis of incorrect information, it has been claimed.

The Association of Financial Guaranty Insurers has written to Bank of America chief executive officer Brian Moynihan on the issue, valuing the potential cost of buy backs at between $10 billion and $20 billion.

According to the organization, more than 50 per cent of the bad residential mortgages and home equity credit lines that were created between 2005 and 2007 should be repurchased, reports Bloomberg.

Bank of America stated it is facing more than $11 billion worth of unresolved claims from buyers and insurers of mortgage securities who say they were sold the loans after being presented with false or misleading data.

The financial institution said it is dealing with the claims on a case-by-case basis.

Last month, an inside source told the Wall Street Journal that Bank of America is considering selling its stake in asset management firm BlackRock as it continues to shore up its balance sheet against the threat of future economic shocks.

By Claire Archer

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