Updated Friday, August 1, 2014 as of 10:28 PM ET
- Bank Channel
BofA's Estimated Excess Legal Costs Drop to $5B
by: Hugh Son
Friday, May 2, 2014

(Bloomberg)--Bank of America Corp., the lender plagued by disputes over faulty home loans, said legal bills could exceed reserves by as much as $5 billion.

The revised estimate contained in the company’s quarterly filing with regulators today compares with $6.1 billion as of Dec. 31. The bank reported a surprise first-quarter loss on April 16 after adding $2.4 billion to legal reserves.

Chief Executive Officer Brian T. Moynihan faces at least one more large hurdle as he cleans up the mortgage mess inherited when he took over in 2010. U.S. prosecutors are seeking more than $13 billion to resolve federal and state investigations of mortgage-bond sales, people with knowledge of the matter said last month.

Bank of America is among at least eight banks under investigation for misleading investors about the quality of bonds backed by home loans. Most of the problematic mortgages at the Charlotte, North Carolina-based firm were inherited when it bought subprime lender Countrywide Financial Corp. and Merrill Lynch & Co.

Other banks that have faced scrutiny include Citigroup Inc., Credit Suisse Group AG and Wells Fargo & Co. Lenders have spent more than $100 billion to resolve mortgage disputes since the financial crisis, with Bank of America’s costs soaring past $50 billion.

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