Bank of America’s Mortgage Settlement Gets the Green Light
Bank of America’s (NYSE:BAC) $8.5 billion settlement to put to rest the claims brought forth by nearly 25 mortgage securities investors has gotten the green light from a New York State judge who, over a 53 page decision, determined that the 2011 settlement was “reached in good faith,” the New York Times is reporting.
The original settlement was disputed by AIG (NYSE:AIG), which was a significant investor in the mortgage securities, and asserted that trustee supervising the bonds “did not push aggressively enough” for additional money from Bank of America. However, Justice Barbara R. Kapnick of State Supreme Court in Manhattan “did not abuse its discretion in entering into the settlement agreement, and did not act in bad faith or outside the bounds of reasonable judgment,” she said in her decision.
AIG contended that the trustee — Bank of New York Mellon — did not live up to its duties throughout the process, one which was “fraught with conflicts of interest.” However, Kapnick said that claims made by mortgage investors regarding loan modifications would remain in place, since Bank of New York Mellon settled them “without investigating their potential worth or strength,” the Times said.