Investors Extend Talks With Bank of America Over Mortgage Bonds
by
Dec 16th 2010 7:51AM
Updated Dec 16th 2010 7:55AM
Bank of America (BAC) said talks will continue with bondholders who are demanding it buy back securities backed by billions of dollars of bad mortgages.
Bank of America has been in talks with investors including Pacific Investment Management Co (Pimco), BlackRock Inc (BLK) and the Federal Reserve Bank of New York over $47 billion of mortgage bonds, Bloomberg News reported.
Some of these investors agreed to extend a deadline set in October, Bank of America said. The bank did not name the investors or a new deadline.
The bonds are backed by loans created by Countrywide Financial, a unit of Bank of America.
"The reason why settlement is a much-preferred alternative to litigation is to avoid extensive discovery," said Manal Mehta, a co-founder of hedge fund Branch Hill Capital in San Francisco. "Who knows what sorts of skeletons lurk in the closets of Countrywide?"
Branch Hill Capital has bet against Bank of America shares.
Pressure has been mounting on big banks to buy back bonds that are backed by mortgages that have gone sour. Investors, bond insurers and government mortgage agencies Fannie Mae and Freddie Mac are all pushing banks to take back the securities at face value.
Brian T. Moynihan, CEO of Bank of America, said in November that the company would engage in "hand-to-hand combat" to fend off unwarranted buyback demands.
Bank of America has been in talks with investors including Pacific Investment Management Co (Pimco), BlackRock Inc (BLK) and the Federal Reserve Bank of New York over $47 billion of mortgage bonds, Bloomberg News reported.
Some of these investors agreed to extend a deadline set in October, Bank of America said. The bank did not name the investors or a new deadline.
"The reason why settlement is a much-preferred alternative to litigation is to avoid extensive discovery," said Manal Mehta, a co-founder of hedge fund Branch Hill Capital in San Francisco. "Who knows what sorts of skeletons lurk in the closets of Countrywide?"
Branch Hill Capital has bet against Bank of America shares.
Pressure has been mounting on big banks to buy back bonds that are backed by mortgages that have gone sour. Investors, bond insurers and government mortgage agencies Fannie Mae and Freddie Mac are all pushing banks to take back the securities at face value.
Brian T. Moynihan, CEO of Bank of America, said in November that the company would engage in "hand-to-hand combat" to fend off unwarranted buyback demands.
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