Bank of America 2012 Annual Report Download - page 212

210 Bank of America 2012
Certain of the motions to intervene and/or notices of intent to
object allege various purported bases for opposition to the
settlement, including challenges to the nature of the court
proceeding and the lack of an opt-out mechanism, alleged conflicts
of interest on the part of the Investor Group and/or the Trustee,
the inadequacy of the settlement amount and the method of
allocating the settlement amount among the Covered Trusts, while
other motions do not make substantive objections but state that
they need more information about the settlement.
It is not currently possible to predict how many parties who
have appeared in the court proceeding will ultimately object to the
BNY Mellon Settlement, whether the objections will prevent receipt
of final court approval or the ultimate outcome of the court approval
process, which can include appeals and could take a substantial
period of time. On August 10, 2012, the Court issued an order
setting a schedule for discovery and other proceedings, and setting
May 30, 2013 as the date for the final court hearing on the
settlement to begin. However, there may be changes to the
schedule for the final court hearing and any appeals could take a
substantial period of time. Accordingly, it is not possible to predict
when the court approval process will be completed.
If final court approval is not obtained by December 31, 2015,
the Corporation and legacy Countrywide may withdraw from the
BNY Mellon Settlement, if the Trustee consents. The BNY Mellon
Settlement also provides that if Covered Trusts holding loans with
an unpaid principal balance exceeding a specified amount are
excluded from the final BNY Mellon Settlement, based on investor
objections or otherwise, the Corporation and legacy Countrywide
have the option to withdraw from the BNY Mellon Settlement
pursuant to the terms of the BNY Mellon Settlement agreement.
There can be no assurance that final court approval of the
settlement will be obtained, that all conditions to the BNY Mellon
Settlement will be satisfied or, if certain conditions to the BNY
Mellon Settlement permitting withdrawal are met, that the
Corporation and legacy Countrywide will not withdraw from the
settlement. If final court approval is not obtained or if the
Corporation and legacy Countrywide withdraw from the BNY Mellon
Settlement in accordance with its terms, the Corporation’s future
representations and warranties losses could be substantially
different than existing accruals and the estimated range of
possible loss over existing accruals described under Whole Loan
Sales and Private-label Securitizations Experience on page 215.
2010 Government-sponsored Enterprise Agreements
On December 31, 2010, the Corporation reached agreements with
FHLMC and FNMA, under which the Corporation paid $2.8 billion
to resolve certain repurchase claims involving first-lien residential
mortgage loans sold directly to the GSEs by entities related to
legacy Countrywide (the 2010 GSE Agreements). The agreement
with FHLMC extinguished all outstanding and potential mortgage
repurchase and make-whole claims arising out of any alleged
breaches of selling representations and warranties related to loans
sold directly by legacy Countrywide to FHLMC through 2008,
subject to certain exceptions. The agreement with FNMA
substantially resolved the existing pipeline of repurchase claims
outstanding as of September 20, 2010 arising out of alleged
breaches of selling representations and warranties related to loans
sold directly by legacy Countrywide to FNMA. The 2010 GSE
Agreements did not cover outstanding and potential mortgage
repurchase claims arising out of any alleged breaches of selling
representations and warranties related to legacy Bank of America
first-lien residential mortgage loans sold directly to the GSEs or
other loans sold directly to the GSEs other than described above,
loan servicing obligations, other contractual obligations or loans
contained in private-label securitizations.
Unresolved Repurchase Claims
Unresolved representations and warranties repurchase claims
represent the notional amount of repurchase claims made by
counterparties, typically the outstanding principal balance or the
unpaid principal balance at the time of default. In the case of first-
lien mortgages, the claim amount is often significantly greater than
the expected loss amount due to the benefit of collateral and, in
some cases, MI or mortgage guarantee payments. Claims received
from a counterparty remain outstanding until the underlying loan
is repurchased, the claim is rescinded by the counterparty, or the
claim is otherwise resolved. When a claim is denied and the
Corporation does not receive a response from the counterparty,
the claim remains in the unresolved repurchase claims balance
until resolution.
The table below presents unresolved repurchase claims at
December 31, 2012 and 2011. The unresolved repurchase claims
include only claims where the Corporation believes that the
counterparty has a basis to submit claims. For additional
information, see Whole Loan Sales and Private-label
Securitizations Experience in this Note and Note 13 – Commitments
and Contingencies. These repurchase claims do not include any
repurchase claims related to the BNY Mellon Settlement regarding
the Covered Trusts.
Unresolved Repurchase Claims by Counterparty and
Product Type
December 31
(Dollars in millions) 2012 2011
By counterparty (1, 2)
GSEs (3) $ 13,530 $ 6,221
Monolines 2,449 3,082
Whole-loan investors, private-label securitization
trustees, third-party securitization sponsors and other 12,299 3,304
Total unresolved repurchase claims by counterparty (3) $ 28,278 $ 12,607
By product type (1, 2)
Prime loans $ 8,793 $ 3,925
Alt-A 5,428 2,286
Home equity 2,394 2,872
Pay option 5,884 1,993
Subprime 3,687 891
Other 2,092 640
Total unresolved repurchase claims by product type (3) $ 28,278 $ 12,607
(1) Excludes certain MI rescission notices. However, at December 31, 2012 and 2011, included
$2.3 billion and $1.2 billion of repurchase requests received from the GSEs that have resulted
solely from MI rescission notices. For additional information, see Mortgage Insurance Rescission
Notices in this Note.
(2) At December 31, 2012 and 2011, unresolved repurchase claims did not include repurchase
demands of $1.6 billion and $1.7 billion where the Corporation believes the claimants have
not satisfied the contractual thresholds as noted on page 211.
(3) As a result of the FNMA Settlement, $12.2 billion of these claims were resolved in January
2013.
During 2012, the Corporation received $22.4 billion in new
repurchase claims, including $10.3 billion submitted by FNMA and
covered by the FNMA Settlement, $2.3 billion submitted by the
GSEs for both legacy Countrywide and legacy Bank of America
originations not covered by the 2010 GSE Agreements or the FNMA
Settlement, $8.0 billion submitted by private-label securitization
trustees, $1.5 billion from whole-loan investors, primarily third-