3 Hitches in Bank of America’s Big Mortgage Settlement

Discussion in 'Stock Market' started by hvactec, Jul 5, 2011.

  1. hvactec
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    hvactec VIP Member

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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 BofA’s 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 America’s settlement.)

    The group of bond investors challenging the settlement — we don’t know their identities — may not succeed in the courts, of course. But at the very least their potential challenge shows BofA’s 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 bank’s collective profits since the financial crisis. According to the investor group’s 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
     
  2. hvactec
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    hvactec VIP Member

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    Bank of America should payback what is due with interest in full.
    I mean homeless man gets arrested for plugging in a cell phone, he has to pay back what was due.
     
  3. waltky
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    waltky Wise ol' monkey Supporting Member

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    Granny says, "Dat's right - make `em pay it back...
    :clap2:
    FTC: Countrywide borrowers to get $108 million in refunds
    July 20, 2011: Borrowers who were overcharged by Countrywide Financial more than three years ago are finally going to get what's due to them.
    See also:

    Fed hits Wells Fargo with $85 million fine
    July 20, 2011: The Federal Reserve announced a record $85 million fine Wednesday against Wells Fargo for allegedly pushing borrowers with good credit into expensive mortgages and falsifying loan applications.
     
  4. SofiaY
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    SofiaY Rookie

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    FTC is working on things to solve the problems
     
  5. editec
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    editec Mr. Forgot-it-All

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    Do any of us have any plans to sue for the overpriced real estate we bought?

    Or are only bond investors worthy of such special consideration?
     

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