For Bank of America, Countrywide Financial is turning into a fixer-upper home that keeps needing one more budget-busting repair.
In January 2008, then-chief executive Ken Lewis called the Charlotte bank's $4 billion deal to buy the troubled lender a "compelling value." But nearly three years later, the mortgage unit created by the acquisition is a major headache for Lewis' successor, Brian Moynihan, and the bank's shareholders.
Since the purchase closed in July 2008, the bank's home loan division has lost $8.5 billion. Bank of America has reached more than $730 million in Countrywide-related legal and regulatory settlements. And the bank has set aside $4.4 billion to cover requests from investors to buy back soured home loans.
And that's not likely to be the final tab. A thicket of lawsuits remains, and the bank has acknowledged it expects a long fight against requests to buy back mortgages. At the end of the third quarter, the outstanding requests totaled nearly $13 billion. Like other major lenders, Bank of America is also under investigation by state attorneys general for its handling of foreclosure-related paperwork.
The costs could become clearer in coming days as the bank submits regulatory filings. And Moynihan is likely to face more questions about the mortgage business today at an investor conference in Boston.
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