Bank of America will make deeper and broader cuts than other Banks, which will allow it to avoid as much as $850 million in penalties and give more than 200,000 financially strapped households the opportunity to sharply reduce their mortgage balances. The side deal is unique to Bank of America, said the Wall Street Journal, citing a senior administration official. It added that many of the write-downs will be made on loans originated by Countrywide Financial Corp, which Bank of America bought in 2008, and then packaged into securities. Investors in those securities could then be affected by the side deal. Bank of America said on Feb. 9 that under the government settlement, write-downs will be made on loans originated by Countrywide Financial Corp prior to and for a period following the bank's acquisition of that lender. The other banks accused of abusive mortgage practices that settled with the government were Wells Fargo & Co, JPMorgan Chase & Co, Citigroup Inc and Ally Financial Inc.
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