Federal judge hears arguments about Bank of America's settlement

Manhattan Federal Judge William Pauley recently listened to arguments from Bank of America and its investors over the financial institution's $8.5 billion settlement over sour mortgages. Lawyers representing Bank of New York Mellon and a group of institutional investors organized themselves, and submitted memorandums on specific issues to the judge for consideration. Bank of America hopes the arguments will send the settlement back to New York state court.

The $8.5 billion deal Bank of America made with 22 large institutions in June was in response to lawsuits stating Countrywide Financial misrepresented the quality of mortgage-backed securities sold to investors, Forbes reported. Bank of New York Mellon is the trustee for Countrywide's mortgage-backed securities and hopes to get the settlement moved back to the state court.

Bank of New York Mellon's lawyer, Matthew Ingber, told Judge Pauley that the investors who filed the lawsuits have the right to object to the trustee's decision to settle, and the state court is the only appropriate vehicle in which to evaluate the propsosed settlement, Retuers reported. According to the news source, Judge Pauley was more focused on the rights and duties of BNY Melllon as the trustee over Countrywide's securities.

Many investors have voice complaints that Bank of America is underpaying in the settlement, and the ruling is not a fair consequence for the harm caused by the sour mortgages. Federal government agencies, as well, have objected to the settlement. The agencies along with attorneys general from Delaware and New York are actively seeking more information on the case in an effort to stop the settlement and pursue harsher consequences, Bloomberg reported.
 

More News