A New York state judge has approved Bank of America Corp.'s proposed $8.5 billion settlement with mortgage-bond investors including BlackRock Inc. and Pacific Investment Management Co. – however, the agreement reportedly fails to address investors' ability to continue to bring additional loan modification claims.
State Supreme Court Justice Barbara Kapnick on Friday authorized the accord – however, she delayed the entry of the ruling until Feb. 7, according to a Reuters report.
In June 2011, Bank of New York Mellon Corp., the trustee for more than 500 residential mortgage securitization trusts, filed a petition seeking approval of the settlement, which aimed to resolve claims that the loans backing the bonds were poorly underwritten and thus didn't meet their promised quality.
The settlement is one of several Bank of America has negotiated in the past year as it seeks to resolve liabilities tied to faulty mortgages that have cost the company at least $50 billion since the financial crisis. Many of the loans were ‘inherited’ by Bank of America when it purchased Countrywide Financial in 2008.
Initially, dozens of investors objected to the deal, led by American International Group Inc. (AIG), which said the settlement resolves claims for "pennies on the dollar," while losses totaled more than $100 billion.
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