Bank of America Raises Ratings For Fannie Mae and Freddie Mac

Bank of America analysts raised their ratings for Fannie Mae and Freddie Mac as the largest mortgage finance companies settled their investor class action lawsuit. The mortgage lenders have been under a cloud since irregularities showed up on the balance sheets of the two concerns.

The bank changed its rating of Freddie Mac to “buy” from “neutral” and its recommendation on Fannie Mae to “neutral” from “sell.” In both cases it raised its estimate of how high the companies’ share prices can go, the bank said in separate reports today.

Freddie Mac’s so-called target price was raised to $70 from $68.75 in part because of better long-term profitability, Bank of America said. The bank raised Fannie Mae’s to $50 per share from $48, it said. via Bloomberg