It’s a manic Monday for the banking industry. Today, Bank of America announced that its signed a mortgage settlement with Fannie Mae worth $10.3 billion. The size of the settlement is said to be one that will essentially erase the majority of Bank of America’s fourth quarter earnings.
The mortgage settlement with Fannie Mae is to cover the bad home loans stemming from Countrywide Financial, purchased by Bank of America in 2008. Countrywide was a leading subprime home loan lender and the loans that were sold to Fannie Mae, a government-backed mortgage lender, led to huge losses for them.