Court Approves Bank of America’s $8.5 Billion Mortgage Settlement

0
Court Approves Bank of America’s $8.5 Billion Mortgage Settlement
By Bank of America (Own work by the original uploader) [Public domain], via Wikimedia Commons

Bank of America Corp (NYSE:BAC) received a court approval for its $8.5 billion agreement to settle majority of the complaints filed by almost two dozen mortgage securities investors, according to report from the New York Times’ DealB%k.

Settlement in good faith

Justice Barbara R. Kapnick of the State Supreme Court in Manhattan emphasized in the 53-page decision that the banks’ settlement was reached in good faith.

The Odey Special Situations Fund Slides In 2022 But Is Primed For Growth

What is disadvantage of growth fundThe Odey Special Situations Fund declined - 0.3% in November, according to a copy of its monthly investor update, which ValueWalk has been able to review. Following this performance, the $94 million fund has returned - 12.4% year-to-date. It remains 2.16% ahead of its benchmark, the MSCI World Index, for the year. In the November Read More

In the decision, Judge Kapnick wrote “The trustee did not abuse its discretion in entering into the settlement agreement, and did not act in bad faith or outside the bounds of reasonable judgment.”  The Bank of America Nee York Mellon Corporation (NYSE:BK) was the trustee.

However, Judge Kapnick made an exception regarding the claims of investor’s related loan modifications. According to her, investor’s claims could stand because Bank of America Corp (NYSE:BAC) settled the claims without evaluating their potential worth or strength.

The decision of the court could resolve most of the liabilities of Bank of America Corp (NYSE:BAC) related to its acquisition of its subsidiary, Countrywide Financial Corp during the financial crisis. Investors claimed that Countrywide loosened its lending standards to create and package mortgages into investment products, and misrepresented the quality of the home mortgages.  Country Financial sold $174 billion worth of mortgage-backed securities to investors.

Earlier this month, Brian Moynihan, CEO of Bank of America Corp (NYSE:BAC) said the bank’s settlement agreements are significant to resolve its remaining legacy mortgage issues, further streamline and simplify the company, and reduce its expenses over time.

The settlement agreement was supported by 22 investors including BlackRock, Inc. (NYSE:BLK), Metlife Inc (NYSE:MET), and Pimco.

AIG challenges Bank of America settlement

American International Group Inc (NYSE:AIG), one of the investors in the mortgage securities, challenged the settlement agreement. The insurance giant argued that the trustee failed to demand more compensation from Bank of America Corp (NYSE:BAC).

In a statement, American International Group Inc (NYSE:AIG) said, “We respectfully disagree with the other aspects of the court’s ruling, which are not supported by the record and which set a dangerous precedent that could eliminate important protections for investors. This case is very far from over because the settlement will not take effect until a variety of potential post-trial motions and appeals are resolved.”

No posts to display