mkytz15

BAC also announced a settlement on legacy Countrywide mortgage claims for $8.5 billion. The settlement looks like it includes all of Countrywide's first-lien MBS loans which were probably the lowest quality among the non-agency mortage loans BAC had on its books. The settlement covers over $200 billion in principal of the non-agency MBS that were originated between 2004 and 2008. Basically, investors were actually more concerned with what the potential mortgage warranty expense would have looked like as well as private label put-backs -- and this settlement, while costly, helps alleviate the two aforementioned issues which were among the greatest risk factors for investors.

(Disclaimer: I don't cover financials but this was my read-through based on some docs that I read as well as what I've heard on the trading desk)