Judge approves tentative deal for Countrywide
The Countrywide unit of Bank of America was able to obtain final approval of a USD500 million securities class action suit settlement with its investors arising from the devaluated residential mortgage-backed securities.
US Distritct Court Judge Mariana Pfaelzer, during a hearing held in Los Angeles, had put aside the objections from the Federal Deposit Insurance Corp. The FDIC argued that as the receiver in the bankruptcy of 19 banks, the said agreement entered into only favors a small class of investors rather than everyone as a while.
According to Judge Pfaelzer, "I'm going to have to write something. Nothing is final until the court has written an order." She then told lawyers, "I think this is a very, very significant case.
This settlement agreement sets aside the claims against Countrywide, which at the time was the largest US mortgage lender prior to the takeover by Bank of America back in 2008, admits the firm's actions to milsead investors in the offer documentation about the home loans pooled for the securities being sold. Much of the securities offered had the highest credit ratings and had the steepest fall when they lost value as their value was cut to junk status at the collapse of the US housing market.