BOA to pay investors $8.5bn in mortgage settlement

by Ryan Smith31 Jan 2014
Bank of America will pay $8.5bn to mortgage bond investors to settle claims that the loans backing securities sold by the bank didn't meet quality standards.

The settlement was approved today by a New York State judge, according to a Bloomberg report. A petition seeking approval of the settlement was filed in June 2011 by Bank of New York Mellon Corp., trustee for about 500 of the residential mortgage-securitization trusts.

Many investors objected strenuously to the deal, claiming that total investor losses on the shoddy securities were more than $100bn, and that the settlement resolved the claims for only pennies on the dollar. 

But New York State Supreme Court Justice Barbara Kapnick ruled that in reaching the agreement, Bank of New York Mellon “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.” Kapnick did allow some loan modification claims to go forward, saying the trustee "abused its discretion" on those claims, Bloomberg reported.

That $8.5bn may not be the only check Bank of America will have to cut. The Justice Department has asked U.S. District Court Judge Jed Rakoff to fine the lender $2.1bn for its fraud conviction last year over shoddy loans sold by its Countrywide unit. BOA, on the other hand, has argued that it shouldn't have to pay the government anything.


  • by guern | 1/31/2014 1:22:03 PM

    A paltry sum............

  • by Gordon | 1/31/2014 1:46:17 PM

    Don't be duped! Tax payers bail the banks out,
    the Feds are as much as fault as the banks.All the mortgage money came from the bond market
    to start with. What about the millions of homeowners...nothing for them! This is just politics, the goverment saying they are doing something so they can buy votes. Why are the CEO,S of Countrywide, BoA, FannyMae and Freddiemac and many others not in prison
    where they belong. Who is helping the famlies who lost their homes?

  • by Lisa | 1/31/2014 2:45:30 PM

    All so true, the borrowers once again get nothing to offset their losses and the bank get a small slap. Bank of NY is just as evil as B of A. Sickening that the CEO's and SEC are not punished individually, so wrong.


Is TILA-RESPA a good or bad thing long term?