New York judge approves Bank of America settlement over mortgage-backed securities

[JURIST] A New York state judge on Friday approved an $8.5 billion settlement between Bank of America (BOA) [corporate website] and almost two dozen mortgage securities investors, holding that the 2011 agreement was reached in good faith. In a 54-page ruling, New York State Supreme Court Justice Barbara Kapnick found that BNY Mellon, a party in the matter, did not abuse its discretion [NYT report] when entering into the settlement agreement. American International Group (AIG), one of the country's largest insurers and an investor in the securities, objected to the settlement [AP report] due to a lack of adequate recovery, stating that there still remains several appeals that need resolving before the settlement takes effect.

The effort to hold banking giants liable for their roles in mortgage fraud and the ensuing financial crisis has been ongoing. Last October BOA was found liable [JURIST report] by a federal court jury for fraudulently making bad loans and for removing quality checks for those loans. JPMorgan Chase & Co. settled [JURIST report] a case with the DOJ days beforehand in the amount of $13 billion. The effort against BOA itself is also ongoing [JURIST report]. The DOJ filed another suit in August in the US District Court for the Western District of North Carolina for similar fraud amounting to more than $850 million. In January of last year BOA settled a separate claim [JURIST report] brought by Fannie Mae over its lending practices for $10 billion. BOA has elected to settle other claims as well, such as the class-action suit brought [JURIST report] by Merrill Lynch in 2012, with the settlement agreement amounting to $2.43 billion. In all, claims arising from BOA's role in the 2007-2008 financial crisis have already cost the corporation several billion dollars, with more claims and suits still to be adjudicated or settled.

 

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