Bank of America and MBIA, a mortgage insurer, have reached a deal to settle a dispute over faulty mortgage securities issued during the U.S. housing boom, according to the Wall Street Journal.
As part of the settlement, Bank of America will pay MBIA $1.6 billion in cash, along with other compensation, provide MBIA with a credit line of $500 million and take a stake of about 5 percent in MBIA's holding company, the Journal said.
MBIA's stock surged $4.36, or 44 percent, to $14.19 as of 1:45 p.m. Eastern Daylight Time. Bank of America rose 53 cents, or 4.2 percent, to $12.77.
Kevin Brown, a spokesman for MBIA, didn't immediately return calls seeking comment. Scott Silvestri, a spokesman for Bank of America also didn't return calls seeking comment.