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US States, Housing Regulator Drop Objections to $8.5 Billion BofA Deal

economictimes.indiatimes.comMay 4, 2013

By Reuters

NEW YORK: The New York and Delaware attorneys general and the US housing regulator on Friday dropped their objections to Bank of America Corp's proposed $8.5 billion settlement with investors in Countrywide mortgage-backed securities, according to court filings.

Other parties, including American International Group Inc and several Federal Home Loan banks, remain opposed to the deal.

New York Attorney General Eric Schneiderman and Gregory Strong, deputy attorney general for the Delaware Department of Justice, said in a joint filing on Friday they were still not endorsing the settlement.

The attorneys general were not expressing a view about the settlement's "adequacy or the reasonableness or propriety of the trustee's or any other party's conduct," they said.

In a separate filing, the Federal Housing Finance Agency withdrew its conditional objection to the proposed settlement.

The deal was reached in June 2011 with 22 institutional investors in trusts issued by Countrywide Financial, which was acquired by Bank of America in 2008.

It was negotiated by Bank of New York Mellon Corp as trustee for the 530 residential mortgage-securitization trusts with an estimated $174 billion of unpaid principal.

BlackRock Inc, Metlife Inc and Allianz SE's

Pacific Investment Management Co were among the investors who signed onto the accord, which affected all certificate holders in the trusts.

A hearing is scheduled to begin on May 30 in New York state court on whether the settlement should be approved.

The hearing "should provide the court an adversarial presentation of all the available facts and legal arguments," the attorneys general said in their filing.

Justice Barbara Kapnick of New York state court in Manhattan set a May 3 deadline for opponents of the settlement to file objections.

In its notice, the FHFA did not give any reasons for its decision to lift its conditional objection and a spokeswoman for the agency declined comment.

New York and Delaware sought permission last year to intervene in the case and raised questions about the "fairness and adequacy" of the proposed settlement.

Schneiderman claimed investors would receive only pennies on the dollar for losses suffered. He also maintained at one time that Bank of New York Mellon had a conflict of interest because it stood to receive financial benefits under the settlement.

At one point, Schneiderman brought fraud counterclaims against Bank of New York Mellon, but those claims were dropped last year.

In Friday's filing, the attorneys general said the "adversarial proceeding might have been avoided had the trustee provided notice to all certificate holders at an earlier point in the settlement negotiation process."

Kevin Heine, a spokesman for Bank of New York Mellon, declined comment. The bank maintains it has always fulfilled its duties as trustee.

The FHFA oversees mortgage financiers Fannie Mae and Freddie Mac, which back about half the existing US home loans. The enterprises were seized by the government in 2008 as mortgage losses mounted.

The case is In re: Bank of New York Mellon, New York State Supreme Court, New York County No. 651786/2011.

Back to May 2013 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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