[ by Melanie Gretchen ]

Bank of America announced Monday it had reached $11.6 billion of settlements with mortgage finance company, Fannie Mae and a $1.8 billion sale of collection rights on home loans.  Not surprisingly, the deal pertains to home mortgages that were issued by Countrywide Financial - a Ken Lewis legacy that he proudly acquired during a one of his visions of grandeur.  

The agreement calls for the Charlotte, NC-based bank to:

• pay $3.6 billion to Washington-based Fannie Mae;
• buy back $6.75 billion of bad loams from the mortgage company to clear up all claims that government-owned Fannie Mae made against Bank of America. 

The End of the Line. Fannie Mae and Freddie Mac, both government-owned mortgage giants, blamed much of their mortgage losses on Countrywide, whose troubles became BofA's troubles when it "shot-itself-in-the-foot-by buying" this sub-sub-prime mortgage loan company in 2008.  

For the most part, Bank of America had reserved for these anticipated obligations.  To date, including the current settlement, the Countrywide acquisition has cost Bank of America more than $40 billion in losses on real estate, legal costs and settlements. 

[C-I Note:  Which is why ex-CEO Ken Lewis' and his legacy as a corporate entrepreneur will forever remain buried 6 feet under.  As Harry Callahan was fond of saying:  "A  man just has to know his limitations."]

For further details, go to [Dealbook, 1/7/13].