Investors in mortgage-backed securities – including several pension funds – said Countrywide misled them about the quality of mortgages underlying about $15bn worth of securities they bought between 2005 and 2007, according to Reuters. The investors originally sued over about $352bn worth of mortgage-backed securities, but U.S. District Judge Mariana Pfaelzer ruled that the plaintiffs could sue only over the securities they actually bought, not ones with similar qualities, Reuters reported.
The settlement, made public Friday, is the largest yet in a federal class-action lawsuit over mortgage-backed securities. In accepting the settlement, Pfaelzer also awarded the plaintiff’s lawyers $85 million in attorney fees and $2.98 million for expenses.
Bank of America has had its share of legal troubles lately. The bank is currently awaiting a ruling on damages after being found liable for fraud in federal court for Countrywide’s sales of mortgage-backed securities. The government also filed two lawsuits in August alleging that the lender overstated the quality of $850 million worth of mortgage-backed securities. BOA also shelled out $2.2 million in September for discriminating against more than 1,000 black job applicants.
A federal judge has approved Bank of America’s $500 million settlement with investors who bought mortgage debt from the lender’s Countrywide unit, according to a Reuters report.