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Last week, investors were excited that Bank of America had finally put its big mortgage headaches behind it. Today, we have a monkey wrench in those plans.
As first reported by The Wall Street Journal, a group of bond investors said it plans to challenge BofAs proposed $8.5 billion settlement with some investors who lost money on fizzled mortgage-backed securities.
(Click HERE to read the mortgage-bond challenge to Bank of Americas settlement.)
The group of bond investors challenging the settlement we dont know their identities may not succeed in the courts, of course. But at the very least their potential challenge shows BofAs path out of mortgage hell may not be smooth.
The investor group, called Walnut Place, has at least three main objections to the BofA mortgage settlement reached last week:
1) Not Enough Money: Walnut Place said BofA is getting off too easy in only agreeing to dole out $8.5 billion which is more than the banks collective profits since the financial crisis. According to the investor groups court filing:
[BofA unit] Countrywide may be liable to repurchase loans with unpaid principal balances of as much as $242 billion. The $8.5 billion that Countrywide and Bank of America have agreed to pay is therefore only a small fraction of the potential liability that they would have faced in litigation on behalf of the trusts.
2) Settlement Investors Are Conflicted: Walnut Place sees conflicts-of-interest in the investors including Pimco, BlackRock and the Federal Reserve Bank of New York that negotiated the $8.5 billion settlement with BofA deal. Walnut Place said in its filing:
[M]any of these 22 investors have substantial ongoing business relationships with Bank of America other than their ownership of certificates in Countrywide-sponsored trusts. For example, BlackRock Financial Management, Inc., is one of the 22 investors. During the time in which the Settlement Agreement was being negotiated, Bank of America owned up to 34 percent of BlackRock .Many other of the 22 investors also have substantial business dealings with Bank of America or its subsidiaries other than their ownership of certificates in Countrywide-sponsored trusts.
read full story 3 Hitches in Bank of America’s Big Mortgage Settlement - Deal Journal - WSJ
As first reported by The Wall Street Journal, a group of bond investors said it plans to challenge BofAs proposed $8.5 billion settlement with some investors who lost money on fizzled mortgage-backed securities.
(Click HERE to read the mortgage-bond challenge to Bank of Americas settlement.)
The group of bond investors challenging the settlement we dont know their identities may not succeed in the courts, of course. But at the very least their potential challenge shows BofAs path out of mortgage hell may not be smooth.
The investor group, called Walnut Place, has at least three main objections to the BofA mortgage settlement reached last week:
1) Not Enough Money: Walnut Place said BofA is getting off too easy in only agreeing to dole out $8.5 billion which is more than the banks collective profits since the financial crisis. According to the investor groups court filing:
[BofA unit] Countrywide may be liable to repurchase loans with unpaid principal balances of as much as $242 billion. The $8.5 billion that Countrywide and Bank of America have agreed to pay is therefore only a small fraction of the potential liability that they would have faced in litigation on behalf of the trusts.
2) Settlement Investors Are Conflicted: Walnut Place sees conflicts-of-interest in the investors including Pimco, BlackRock and the Federal Reserve Bank of New York that negotiated the $8.5 billion settlement with BofA deal. Walnut Place said in its filing:
[M]any of these 22 investors have substantial ongoing business relationships with Bank of America other than their ownership of certificates in Countrywide-sponsored trusts. For example, BlackRock Financial Management, Inc., is one of the 22 investors. During the time in which the Settlement Agreement was being negotiated, Bank of America owned up to 34 percent of BlackRock .Many other of the 22 investors also have substantial business dealings with Bank of America or its subsidiaries other than their ownership of certificates in Countrywide-sponsored trusts.
read full story 3 Hitches in Bank of America’s Big Mortgage Settlement - Deal Journal - WSJ