Bank of America in $8.5B mortgage settlement

NEW YORK, NY (AP) — Bank of America and its Countrywide unit will pay $8.5 billion to settle claims that the lenders sold poor-quality mortgage-backed securities that went sour when the housing market collapsed.

The Charlotte-based bank says the settlement with 22 investors is subject to court approval and covers 530 trusts with original principal balance of $424 billion.

As a result of the settlement, Bank of America put its second-quarter loss at $8.6 billion to $9.1 billion. Excluding the settlement and other charges, the bank expects to post a quarterly loss of $3.2 billion to $3.7 billion.

Shares of Bank of America Corp. jumped 4 percent before the market opened, with investors happy that the bank can put very big uncertainty behind it.

(Copyright 2011 by The Associated Press. All Rights Reserved.)