Federal magistrate Judge David S. Cayer has issued a nonbinding ruling suggesting that the Justice Department lawsuit against Bank of America over mortgage backed securities sales be dismissed, The New York Times has reported. A Federal District Court judge in Charlotte, N.C. will decide whether to adopt to magistrate judge's recommendation or to allow the lawsuit to proceed.
In issuing the ruling, the magistrate judge said the Justice Department had failed to satisfy the requirement that BOA's misstatements about mortgage backed securities had materially affected the Federal Home Loan Bank's government regulator.
The New York Times reported that the outcome could embolden other financial institutions to press ahead in lawsuits brought by the government rather than seek settlements.
The DOJ said the agency had filed a notice of objections with the district court, The New York Times said. Meanwhile, a spokesman for BOA said the bank was pleased with the recommendation.
A judge has argued that the government's suit against Bank of America over a bad mortgage deal should be tossed out.