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By Aruna Viswanatha
WASHINGTON, April 2 (Reuters) - Bank of America Corp agreed to pay $165 million to settle charges by the U.S. creditunion regulator involving sales of mortgage-backed securities tocorporate credit unions that led them to fail, the regulatorsaid on Tuesday.
In February, the bank disclosed it had reached a preliminaryagreement with the National Credit Union Administration, andsaid it would be covered by existing reserves, but did notdisclose a value at the time.
The settlement adds to a growing list of mortgage-relatedlegal troubles Bank of America has been able to put behind it,after sustaining more than $40 billion in losses from its homeloan business since the financial crisis.
Most of those losses stemmed from its 2008 purchase ofCountrywide Financial, once the largest U.S. subprime mortgagelender.
The new settlement is intended to resolve claims concerningmortgage securities offerings that the regulator had threatenedto sue the bank and its Countrywide and Merrill Lynch unitsover, Bank of America said in its annual report.
A bank spokesman declined comment on Tuesday beyond theearlier filing. The credit union regulator did not releasesettlement papers and declined to provide additional detailsabout the deal.
In recent months, Bank of America has moved closer to endingits mortgage troubles, with more than $14 billion in settlementsannounced in January alone.
Around $3 billion went to end a loan-by-loan review of pastforeclosures mandated by the government. Another $11.6 billionwent to resolve allegations from government mortgage financecompany Fannie Mae that the bank improperly sold mortgages thatlater soured, and to resolve questions about foreclosure delays.
The bank has also sought to sign a $8.5 billion settlementto resolve claims from private investors who purchased toxicsecurities, but that deal is still awaiting approval in New Yorkstate court.
The credit union regulator previously indicated it objectedto that proposed deal, but on Friday it withdrew its notice ofintent to object without providing a reason for the change.
RECOVERING LOSSES
Separately, the regulator has filed 10 lawsuits againstbanks - including units of JPMorgan Chase & Co, Barclays, Credit Suisse, Goldman Sachs andRoyal Bank of Scotland - over mortgage-backed securitiesthey sold to corporate credit unions that later collapsed due tolosses on the securities.
A consolidated hearing in the cases is scheduled for April29 in Kansas federal court, where the lawsuits are filed.
The regulator has settled similar claims against Citigroup, Deutsche Bank and HSBC for a totalof$170 million, with Deutsche Bank paying around $145 million.
The National Credit Union Administration has been trying torecover losses related to the failure of five institutions thatit seized in 2009 and 2010 after they ran into trouble due tothe crumbling housing market.
The wholesale credit unions have experienced more troublesthan their retail counterparts because they did not face thesame restrictions on permitted investments, leading to biglosses during the financial crisis.
"We have a statutory obligation to secure recoveries forcredit unions and ensure that consumers remain protected,"Debbie Matz, the chairman of the regulator's board, said in thestatement announcing the Bank of America settlement. "We willcontinue to expend every possible effort to fulfill thatimportant responsibility."
Bank of America did not admit fault as part of thesettlement, the credit union regulator said.
