Bank of America agrees to $315 million settlement
Bank of America agrees to $315 million settlement
Bank of America Corp. agreed yesterday to pay $315 million to settle claims by investors who said they were misled about mortgage securities offerings by its Merrill Lynch unit, Reuters reported.
The proposed settlement, which requires court approval, is one of the largest for investors claiming that banks misrepresented the quality of mortgage-backed securities they sold. It was filed late Monday night with the U.S. District Court in Manhattan.
The second-largest U.S. bank, Bank of America bought mortgage lender Countrywide Financial Corp. in July 2008 and Merrill Lynch six months later.
The Charlotte, N.C.-based lender did not admit wrongdoing in agreeing to the settlement. Investors led by the Public Employees’ Retirement System of Mississippi pension fund had sued over their purchases of so-called mortgage pass-through certificates in 18 securities offerings involving Merrill.
Investors contended that the offering documents that Merrill prepared contained false statements or omitted key details about the quality of the loans backing their investments.
Many of these loans were risky and were made by lenders such as Countrywide and the now-bankrupt IndyMac Bancorp Inc. and New Century Financial Corp., the investors said. Though their securities were at first largely rated investment-grade, most eventually fell to “junk” status and lost value, they added.
Bank of America Corp. agreed yesterday to pay $315 million to settle claims by investors who said they were misled about mortgage securities offerings by its Merrill Lynch unit, Reuters reported.
The proposed settlement, which requires court approval, is one of the largest for investors claiming that banks misrepresented the quality of mortgage-backed securities they sold. It was filed late Monday night with the U.S. District Court in Manhattan.
The second-largest U.S. bank, Bank of America bought mortgage lender Countrywide Financial Corp. in July 2008 and Merrill Lynch six months later.
The Charlotte, N.C.-based lender did not admit wrongdoing in agreeing to the settlement. Investors led by the Public Employees’ Retirement System of Mississippi pension fund had sued over their purchases of so-called mortgage pass-through certificates in 18 securities offerings involving Merrill.
Investors contended that the offering documents that Merrill prepared contained false statements or omitted key details about the quality of the loans backing their investments.
Many of these loans were risky and were made by lenders such as Countrywide and the now-bankrupt IndyMac Bancorp Inc. and New Century Financial Corp., the investors said. Though their securities were at first largely rated investment-grade, most eventually fell to “junk” status and lost value, they added.
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