Bank of America ? the largest bank in the country by assets ? has repeatedly made headlines over the past year due to the incredible number of foreclosures and other distressed properties it has on its books, the robo-signing scandal, and other dubious honors.
Today, the bank is making more news in the real estate world, involving both foreclosures and an ambitious real estate transaction that could see the corporation remove itself further from the real estate markets.
We all know that Bank of America is one of the main banks being targeted in a year-long probe by the federal government into the foreclosure quagmire that is the robo-signing scandal. The settlement is still pending; it could ultimately cost the five banks over $20 billion. The uncertainty also continues to wreak havoc with BoA?s stock price, which is why leadership in the bank want a settlement to be reached sooner rather than later.
The bank got a reprieve from New Jersey yesterday, freeing up the corporation to resume foreclosures in that state. BoA is also pushing for a resolution with not just the federal government, but also many of the 50 state attorneys general that have sought legal action against the bank as a result of the foreclosure scandal.
A previous deal worth $8.5 billion has yet to be approved by New York courts. Most of the exposure in this settlement and other cases stems from the beleaguered Countrywide Financial Corp and several toxic assets that this company ? now a subsidiary of Bank of America ? had on its ledgers.
To free up some cash to deal with this problem, Bank of America is contemplating selling approximately $1 billion worth of real estate to the Blackstone Group. Much of the property that would be sold includes commercial property, but a fair amount are residential properties from all over the world. This comes a week after the bank unloaded a credit card business from Canada for $8.6 billion ? signs that the bank is trying to shore up its stock value by selling assets (and also to pay for the impending settlement).
It?s hard to read about some rotten part of real estate without coming across Bank of America?s name. The bank has had a deep presence in virtually every aspect of real estate in this country, and was rocked as hard as any other bank in the foreclosure crisis and collapse of the housing market. It is very possible that this spells the end of BoA?s involvement in real estate altogether; while it may continue to make mortgage loans, it has already sold $500 million worth of mortgages to Fannie Mae and can?t be eager to leap back into the business.
Will other large banks follow suit? Perhaps ? and in the short term, at least, it may mean that local banks and credit unions will be the go-to sources for home loans for investors and homebuyers alike. That approach actually makes sense because these units are less likely to engage in robo-signing and other disputed practices like the big boys who, in many cases, had too many assets going bad all at once.
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Source: http://www.eforeclosuremagazine.com/foreclosure-crisis/bank-of-america-making-real-estate-news-today
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