Bank of America Corp and MBIA Inc have settled their legal disputes, and the settlement includes a $1.6 billion cash payment by the bank to the bond insurer, a person familiar with the settlement said on Monday.

The person, speaking on condition of anonymity, said the deal would bring "total peace" to the two companies' various ongoing legal disputes.

(Reporting by Karen Freifeld; Editing by Maureen Bavdek)