Looming layoffs at Bank of America signal shift in mortgage servicing

Bank of America (BAC) is preparing to lay off nearly 200 workers in its North Texas mortgage servicing operations center as the impact of the bank’s $16.65 billion toxic mortgage settlement is beginning to be seen throughout the entire mortgage industry.

In August, Bank of America finally agreed to settle with theU.S. Department of Justice, other federal agencies and six states to resolve claims over toxic residential mortgage-backed securities, collateralized debt obligations and an origination release on residential mortgage loans sold to Fannie Mae and Freddie Mac.

In the settlement, Bank of America admitted to failing to disclose known uncertainties regarding potential increased costs related to mortgage loan repurchase claims connected to more than $2 trillion in residential mortgage sales from 2004 through the first half of 2008 by the bank and certain companies it acquired, the Securities and Exchange Commission said when the settlement was announced.

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