BofA Said to Consider Foreclosure Deal That Leaves Securities Probes Open

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http://www.bloomberg.com/news/2011-08-16/bofa-weighs-foreclosure-deal-with-n-y-probe.html

Bank of America Corp. (BAC) may settle a state and federal probe of foreclosure practices in a deal that lets New York proceed with an inquiry into securitizations, according to two people with direct knowledge of the talks.

The firm may pursue an accord with most of the 50 state attorneys general, even if it omits New York’s Eric Schneiderman and at least two other states who are opposed because a deal would impede related inquiries, said one of the people. Negotiations on a broad settlement stalled after Schneiderman indicated he wouldn’t let it block his probe into the bundling and sale of mortgages, said the people, who declined to be identified because talks are private.

Chief Executive Officer Brian T. Moynihan, seeking to reverse a 44 percent stock slide this year, has booked about $30 billion in settlements and writedowns to clean up mortgage liabilities at the biggest U.S. bank since the start of 2010. One of the largest legal matters still pending is the multi- state probe into whether firms servicing mortgages used bogus documents to justify foreclosures.

“They need to resolve this because it’s looming out there as an unknown liability,” said Brian Chappelle, a partner at mortgage-finance consultancy Potomac Partners LLC in Washington and former executive at the Mortgage Bankers Association. “It’s harming the housing recovery because the large institutions are reluctant to originate new loans because of the uncertainty.”