Bank of America to cut most ties to Fannie Mae

Bank of America announced that it will no longer sell some of its mortgages to Fannie Mae.

Effective this month, the nation’s second-largest bank says it will no longer permit mortgages for home purchases, as well as certain refinanced mortgages, to be packaged into Fannie Mae loan securitizations.

The move follows a dispute Bank of America and other banks are having with Fannie on who should take responsibility and endure the costs for past mortgages that ended up in default. Fannie, as well as some investors, want the banks to buy back past loans they made that defaulted.

Bank of America says it will continue to sell its loans to Freddie Mac. It also will continue to sell Fannie Mae loans refinanced through the Making Home Affordable program.