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Bank of America to Pay $8.5 Billion to Settle Countrywide Claims (BAC)

Embattled banking giant Bank of America Corporation ( BAC ) on Wednesday said it has reached a settlement to pay $8.5 billion to make good on claims that lenders in its Countrywide unit allegedly defrauded investors about the quality of its mortgage-backed securities.

A group of 22 investors had brought claims against BAC, demanding repayment for $47 billion in mortgages that Countrywide sold to them as bonds just before the housing market collapsed.

The lawsuit alleged that Countrywide continued to service bad loans and rack up service fees while misleading investors about the quality of those investments. BAC acquired Countrywide in 2008 for $4 billion.

Bank of America CEO Brian Moynihan said the settlement helps assuage "future economic uncertainty" in its banking business and will serve to "clean up the mortgage issues largely stemming from our purchase of Countrywide."

Bank of America shares rose 55 cents, or +5.2%, in premarket trading Wednesday.

The Bottom Line

Shares of Bank of America ( BAC ) have a .37% dividend yield, based on last night's closing stock price of $10.82. The stock has technical support in the $10 price area. If the shares can firm up, we see overhead resistance around the $12-$13 price levels.

Bank of America Corporation ( BAC ) is not recommended at this time, holding a Dividend.com DARS™ Rating of 2.8 out of 5 stars.

Be sure to visit our complete recommended list of the Best Dividend Stocks , as well as a detailed explanation of our ratings system here .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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