BALTIMORE (Legal Newsline) - Maryland Attorney General Douglas Gansler announced a $16.65 billion multi-state and federal settlement on Thursday with Bank of America and two subsequent acquisitions to resolve allegations they unlawfully packaged securities containing toxic mortgages.
Bank of America, Merrill Lynch and Countrywide Financial Corporation allegedly packaged, marketed, issued and sold residential mortgage backed securities with toxic mortgages. Bank of America will pay $16.65 billion to six states and multiple federal agencies. The state of Maryland, its pension programs and local government entities will receive an estimated $75 million portion of the settlement.
"With this settlement, Maryland takes another step towards resolving the widespread economic damage caused by these lenders and the mortgage crisis they created out of sheer greed," Gansler said. "Marylanders will benefit as defrauded state and local government pension plans receive compensation and distressed consumers receive additional mortgage-related relief and assistance."
Maryland's portion of the settlement will compensate investors who were allegedly defrauded, including government entities and their pension plans.
Under the terms of the settlement, Bank of America must provide $7 billion in consumer relief to eligible consumers through affordable rental housing, neighborhood stabilization, community reinvestment, low to moderate income lending, mortgage forbearance and mortgage forgiveness. A minimum of $150 million will be spent on consumer relief in Delaware, Kentucky and Maryland.
The settlement only resolves civil claims arising out of Bank of America's residential mortgage backed securities-related activities.