Boston, MA 02/26/2014 (wallstreetpr) – Bank America Corp (NYSE:BAC) has confirmed it is being investigated by federal investigators over claims it might have violated government housing program. The bank is being investigated on whether it complied with rules concerning the federal housing Administration Direct Endorsement program. As part of a wider industrial inquiry, the bank has confirmed that it is also being investigated on its conduct and practices in its operations involving foreign exchange markets.
Terms of the housing program
The FHA Direct Endorsement Program gives lenders such as banks the authority of approving home loans of which the federal government later insures without any further review. The FHA is legally entitled to demand for reimbursement of loses that may arise if a lender does not follow the required procedure in approving any home loans
The program has in the recent past been mired with court cases and settlement packages as early as F2012 where Citigroup was ordered to pay $158.3 million, Deutsche bank was asked to pay $202.3 million as part of settlement related to similar matters.
Bank America Corp (NYSE:BAC) had also found itself in the same mess earlier and agreed to pay $1 billion to the federal government as settlement after its subsidiary countrywide unit was accused of giving FHA-insured mortgages to unqualified borrowers.
Bank of America facing a surge in potential legal costs
Bank America Corp (NYSE:BAC) has announced that probes into its foreign exchange and mortgage practices could cause a surge in its legal costs to highs of $6.1 billion which is an increase in 20%. The new claims could be detrimental to the banks Chief Executive officer Plans to completely clean up the mess that’ started trickling in, since the economic turmoil of 2008.
Bank America Corp (NYSE:BAC) was down on Tuesday trading session slipping by 1.15% to close the day at a low of $16.34
