BofA reaches $17 billion settlement over sale of mortgage-backed securities

Bank of America reaches $17 billion settlement: AP

Officials familiar with the deal say Bank of America has reached a record $17 billion settlement with federal and state authorities over its role in the sale of mortgage-backed securities in the run-up to the 2008 financial crisis.

The officials say the bank will pay $10 billion in cash and provide consumer relief valued at $7 billion.

They spoke with The Associated Press on condition of anonymity because the deal isn't scheduled to be announced until Thursday at the earliest.

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The bank declined comment.

The agreement requires the bank to acknowledge making misrepresentations about the quality of its residential mortgage-backed securities itself and in those by Countrywide Financial and Merrill Lynch. Those institutions were acquired by the bank in 2008 and were responsible for the bulk of the questionable loans.

Federal attorneys are preparing a civil lawsuit against Countrywide Financial co-founder Angelo Mozilo and several former Countrywide employees for their roles in the case, Bloomberg reported Wednesday, citing sources with knowledge of the matter.

BofA shares were modestly higher on afternoon trading.

—By The Associated Press