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AIG in $650M settlement with Bank of America over mortgages

American International Group announced Wednesday it has reached a $650 million settlement with Bank of America over residential mortgage related disputes.

The settlement resolves outstanding mortgage guaranty claims disputes in accordance with agreed-to claims processes and payment formulae. It includes claims pending related to the creation, offering and sale of residential mortgage backed securities from which AIG and its units suffered losses.

Adam Jeffery | CNBC

It also covers AIG's objections to the $8.5 billion settlement of Countrywide's mortgage repurchase obligations to various investors.

"We are very pleased to have this matter resolved," said Robert H. Benmosche, AIG President and Chief Executive Officer in a release. "Today's settlement is a just resolution that's in the best interest of our various stakeholders."

On Wednesday morning, Bank of America delivered earnings that fell shy of Wall Street's estimates. To track the bank's shares in premarket trade, click here.

Read MoreBank of America quarterly profit drops 43 percent

—By CNBC

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