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Bank Of America's $8.5 Billion Mortgage Settlement Back In State Court

4-traders.comFeb 28, 2012

By Matthias Rieker

In a win for Bank of America Corp. and Bank of New York Mellon Corp., an appeals court decided a $8.5 billion settlement reached with mortgage-backed securities investors should be a matter of state rather than federal court.

The settlement between Bank of New York, as the trustee of the securities, on behalf of investors such as BlackRock Inc. and the Federal Reserve Bank of New York was reached in June and needs to be approved by a judge.

But other investors whose bonds are part of the settlement but weren't part of the negotiations oppose the settlement and were seeking to have a federal judge rule whether the $8.5 billion settlement amount is fair and reasonable. Federal court could have made it easier to those investors to reach a different agreement.

Those investors, including Walnut Place LLC, won a ruling by a federal judge in October. On Monday, the U.S. Court of Appeals for the Second Circuit dismissed the appeal for lack of jurisdiction, and remanded the matter back to the New York Supreme Court.

"This is an incremental positive for BofA, as it likely narrows the scope of review that the settlement will face, and increases the probability that it gets approved in the proposed $8.5b range," Sanford C. Bernstein & Co. analyst John E. McDonald wrote in a research note.

The "move to state court could reduce uncertainty around the cost of putbacks," he said--delinquent mortgages from securitization pools investors demand Bank of America to take back.

Fitch Ratings wrote, "Now that the case has shifted back to NY, approval is likely to occur earlier, perhaps in mid 2012."

Bank of New York declined to comment.

A spokesman for Bank of America said the Charlotte bank's "chief interest has been that the proposed settlement be considered and eventually approved by a court of unquestionable jurisdiction. We are gratified that the matter has been resolved on appeal."

Back to February 2012 Archive

CFLA was founded by the Nation's Leading Foreclosure Defense Attorneys back in 2007 to serve the Foreclosure Defense Industry and fight pervasive Bank Fraud. Since opening our virtual doors, CFLA has rapidly expanded to become the premier online legal destination for small businesses and consumers. But as the company continues to grow, we're careful to hold true to our original vision. For us, putting the law within reach of millions of people is more than just a novel idea—it's the founding principle, just ask Andrew P. Lehman, J.D.. With convenient locations in Houston and Los Angeles, you can contact Our National Account Specialist and General Manager / Member Damion W. Emholtz at 888-758-2352 for a free Mortgage Fraud Analysis or to obtain samples of work product, including cutting edge Bloomberg Securitization Audits, Litigation Support, Quiet Title Packages, and for more information about our Nationally Accredited and U.S. Department of Education Approved "Mortgage Securitization Analyst Training Certification" Classes (3 days) 24 hours for approved CLE & MCLE Credit (Now Available Online).

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