American International Group Inc (NYSE:AIG) said it will receive $650 million in cash under the terms of a settlement with Bank of America related to residential mortgage related disputes. The resolution includes claims pending in New York and California federal courts related to the creation, offering, and sale of RMBS from which AIG and its subsidiaries suffered losses either directly on their own account or in connection with their participation in AIG’s securities lending program.

It also covers the insurer’s objections to the $8.5 billion settlement of Countrywide’s mortgage repurchase obligations to various investors, as well as disputes concerning the issuance of mortgage guaranty insurance by AIG’s United Guaranty subsidiaries to Bank of America and Countrywide. AIG said it will also receive its “pro rata share of whatever amount is ultimately paid out to investors in connection with the Countrywide repurchase settlement.”

“In addition, the parties have agreed, subject to the approval of Fannie Mae, Freddie Mac and certain other mortgage holders, to resolve the outstanding mortgage guaranty claims disputes in accordance with agreed-to claims processes and payment formulae,” AIG said in a statement. AIG closed down 0.1% on Tuesday, near the higher end of the 52-week range between $45.50 and $56.00. It was inactive in recent pre-market trade.