Bank of America has settled yet another expensive mortgage case.

The Federal Housing Finance Agency (FHFA), which represents Fannie Mae and Freddie Mac, brought mortgage-backed securities allegations against the second largest bank in America. Now Bank of America will have to pay $9.5 billion in the settlement they agreed upon with FHFA on Wednesday.

The FHFA “alleged violations of federal and state securities laws against BofA, Countrywide and Merrill Lynch in connection with private label, residential mortgage based securities purchased by Fannie and Freddie between 2005 and 2007.”

Terms of the agreement have Bank of America paying $6.3 billion in cash to Fannie Mae and Freddie Mac. Bank of America will also have to repurchase $3.2 billion worth of bad residential mortgage based securities.

“FHFA has acted under its statutory mandate to recover losses incurred by the companies and American taxpayers and has concluded that this resolution represents a reasonable and prudent settlement of these cases. This settlement also represents an important step in helping restore stabili ty to our broader mortgage market and moving to bring back the role of private firms in providing mortgage credit. Many potential homeowners will benefit from increasing certainty in the marketplace and that is very much the direction we should be taking,” said FHFA Director Melvin L. Watt.

Bank of America said in a statement, “The FHFA settlement resolves one of the most significant remaining pieces of RMBS securities litigation facing the company. With this settlement, Bank of America has now resolved approximately 88 percent of the unpaid principal balance of all RMBS as to which RMBS securities litigation has been filed or threatened for all Bank of America-related entities.”

While this may be a bit of a setback for Bank of America, they did just pass the Fed’s CCAR exam, allowing Bank of America to repurchase $4 billion in common stock and raise their quarterly common stock dividend to $.05 per share.

Another agreement was also reached for Bank of America. New York Attorney General Eric Schneiderman brought a lawsuit against Bank of America in 2010 alleging they failed to “disclose losses at Merrill Lynch prior to the company’s acquisition of the Wall Street giant in 2008.”

In this agreement Bank of America will pay $15 million to settle the claims brought against them by Schneiderman. The deal also involves Bank of America CEO Kenneth Lewis paying $10 million. Lewis will not be able to serve as an officer or a director of a public company for three years under the agreement.

“Since I took office, I’ve acted on the belief that no one, no matter how rich or powerful, should escape accountability for their actions — especially ones that caused such damage to shareholders,” said Schneiderman.

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