Bank of America said it agreed to pay Fannie Mae and Freddie Mac $2.8 billion to settle claims that it sold the mortgage finance companies bad home loans.

Bank of America shares climbed 4.5 percent in early trading Monday. Analysts said many investors had worried the bank would have to buy back billions of dollars of home loans it sold to investors at the height of the housing boom.

“This takes away a nice headline risk” for Bank of America, said Alan Villalon, a senior bank analyst at Chicago-based Nuveen Investments. Get the full story »