Bank of America's bad bank matches

Bank of America (NYSE: BAC), newly appointed director of the bad bank is Terry Laughlin, which uses address CEO Brian Moynihan due to massive transactions troubled mortgage bank loan. The list of chores to treat the pressure on regulatory authorities at all levels on mortgage and foreclosure practices, encouraged by private lawyers, there is no shortage of customers, bondholders angry putbacks demanding and very difficult when the HR staff To conclude all this down.

"It's certainly not an enviable position. There are a number of teachers to serve here," Bloomberg said an official of buy-side. "It will take years to resolve, and any other pension funds, or exposure of the insurer is" considering a lawsuit.

For Laughlin, this is probably not the make or break a unique opportunity, he dreamed that he would receive. More likely, he found himself running a bank.

But he showed a talent for working with distressed entities. He was director general of the OneWest Bank, the successor of California has no savings IndyMac Bancorp, hired by private investors. The Bank of America, which was the point man charging solution for Fannie Mae and Freddie Mac His current work seems tailor-made for him.

If Laughlin can relax all the problems of the Bank of America, Moynihan, at least, very grateful. It will be interesting to see how your salary is structured. Fortunately, the Board has been creative with incentives.

The bank can face "fines" by the government to investigate possible irregularities in the registration process, Charlotte, North Carolina, Bank of America said late Feb. 25 in its annual report. The firm also said that a group of bondholders, including Pacific Investment Management Co. has almost doubled the number of mortgage transactions in which it is difficult for the bank. Legal fees can be as much as $ 1500000000 exceed what the bank had set aside as classified.

"It is not in an enviable position," said Michael Nix, who helps manage about $ 950 million in Greenwood, South Carolina-based Greenwood Capital Inc., which sold its stake in American Bank last month. "There are a number of masters to serve here. It will take years to resolve, and any mutual fund, pension or insurance company in the exhibition "considering making claims against the bank.

Laughlin was promoted this month by CEO Brian T. Moynihan control the costs of resolving disputes arising in 2008, the bank's purchase of Countrywide Financial Corp. After the cancellation of about $ 3 billion last year to settle claims by buyers mortgages in the U.S. US-owned Fannie Mae and Freddie Mac, the bank said other claims can cost an additional $ 7 billion to 10 billion dollars.

Pick Moynihan

Laughlin, left his previous job as general manager based in Pasadena OneWest Bank last year to join Moynihan, a former teammate of FleetBoston Financial Inc.. Before being appointed head of the Services business unit of legacy assets, February 4, helped the company negotiate agreements with Fannie Mae and Freddie Mac

Determination of the cleaning work of Laughlin, Barbara Desoer is responsible for maintaining the building, the home lending business, providing "more attention to resolve the legacy of attachment," Moynihan said on February 4 statement. Moynihan was transferred to the vendors to modify the loans, the revenue of the fold.

bond buyers, including both state-owned enterprises have demanded that Bank of America investors purchase loans that have been said on the basis of erroneous data. The company faces a 10.7 billion U.S. dollars in claims on hold until the end of 2010, applications for bond insurers and other investors has increased.

"I would be absolutely shocked if the number of investors did not come out of the woodwork" to seek a repurchase of the loan, "said Thomas Lawler, former Fannie Mae economist, now a consultant with Virginia-based housing." The possibility of a new combination investors and their representatives seems like it could be quite significant. "

Stock decline

Dan Frahm, a spokesman for the bank, declined to comment yesterday. Laughlin said the airline had gone for an interview.

The bank, led by Moynihan in January 2010 recorded a net loss of 2.2 billion U.S. dollars last year, led by housing-related charges. Bank of America have lost about 15 per cent over the past 12 months in New York trading on Feb. 25.

Lawyers for borrowers, said in court documents that companies, including Bank of America also mismanaged the loan servicing inappropriate material in hundreds of thousands of foreclosures. U.S. authorities can try to extract $ 20 billion in fines largest service companies, two people informed about the possible resolution said last week. Bank of America pause entered the U.S. last year to revise its practice, then resumed the process in most states after the implementation of "improvement of control," according to the filing.

Fannie, Freddie fees

Bank of America said last week that delays in foreclosures may require the company to pay 230 million U.S. dollars "compensation" payments to Fannie Mae and Freddie Mac buyers with a mortgage bank late in the table to settle the loans, according to SU annual application with the Securities and Exchange Commission.

The bank also said federal regulators issued a "number of subpoenas" on his creation of securities backed by mortgages.

When banks sell mortgages to investors, or set of securities, they typically offer "Insurance", which provides them with the support of the loans. Examples include the income of borrowers and the estimated value of the house. If the data have been proven wrong, the bank may be forced to buy back a loan or an investor to replace the lost value.

The company is in talks with the holder of the loan which includes Pimco, BlackRock Inc. and the Federal Reserve Bank of New York, the people familiar with the matter said last year. The group, which in October under pressure the company to redeem points for 115 deals, approximately $ 46 billion, is now under discussion securitisations 225, Bank of America said last week.

"The number of questions

The investor group said in an Oct. 18 letter that the lender has failed in its role as service provider willing to give the required notice of defects in the underlying mortgages. Kathy Patrick, a lawyer for the investors, did not return messages.

Bank of America has "a number of questions about the validity of the allegations" in the letter, including whether investors were eligible to file claims, the lender said in the filing.

Processed by other investors is growing. Allstate Corp., the largest house publicly traded U.S. and auto insurer, sued in December of securities backed by mortgages. bond insurers, including MBIA Inc. and Ambac Financial Group Inc., said companies fraudulently to guarantee Countrywide mortgage-backed securities, full of flaws.

Bank of America has $ 2600000000 legal fees last year, compared 1000000000 dollars in 2009, the company said last week. The lender estimated losses of $ 145,000,000 and $ 1,500,000,000, after the amount has already been earmarked for legal costs. These figures include cases in which the firm was "adequate information" to make its assessment, the bank said.

Wells Fargo & Co., the largest U.S. mortgage lender, said last week that there could be 1.2 billion dollars in a loss of continuation beyond the reserve is already at the company based in San Francisco .