Tuesday, October 8, 2013

FDIC objects to $500M Bank of America settlement

The U.S. government is objecting to a $500 million Bank of America settlement announced in April over mortgages originated by Countrywide Financial Corp., The Wall Street Journal reported Tuesday.

The mortgages were bundled into securities sold to investors, who later claimed they were misled about the quality of the mortgages. Pension funds, including the Maine State Retirement System, that invested in the bonds sued. The bank announced the settlement in its first-quarter earnings report.

A federal judge in California granted preliminary approval to the settlement in August. A hearing on final approval has been set for later this month.

According to the Journal, the Federal Deposit Insurance Corp. filed an objection late Monday, on the grounds that the group of plaintiffs it was negotiated by "had a conflict of interest in negotiating and accepting the proposed settlement because, under the settlement, they would receive substantial payments at the expense of the rest of the class."

Lawsuits in the case go back to November 2007, the bank said in April. The class-action suits involve securities issued from 2005 to 2007 and disclosures made about the mortgages.

The bank has said the settlement would resolve about 80 percent of the unpaid principal balance of Countrywide mortgage-backed securities over which investors have made claims about disclosures -- or threatened to make claims.

A bank spokesman declined to comment Tuesday. The FDIC also declined to comment.


Anonymous said...

Interesting... The observer banking staff writers need to check into the similar class action with (Wachovia)Wells Fargo of 2012. The settlement for that was heard in NY on June 1st 2012. 75 million awarded. However, the Rust Consulting who is handling the disbursement of funds has not done so as yet and will not give a date as to when the funds will be disbursed. What's the hold-up????????????

Anonymous said...

Hey Andrew and Deon. I was wondering if you guys could finally be the ground breaking financial reporters in the industry and start using the proper roman numerals for million. "M" is thousand..."MM" is one thousand thousand or Million. This drives me crazy and every financial publication does this. Be the first! Thanks!

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Anonymous said...

these lenders are still doing the same thing...unless there are other lenders who desire to service bad mortgage loans