Securities Law Prof Blog

Editor: Eric C. Chaffee
Univ. of Toledo College of Law

Friday, August 5, 2011

New York AG Calls $8.5 Billion Countrywide Settlement Unfair

The New York AG has challenged a proposed $8.5 billion settlement between the Bank of New York Mellon and the Bank of America over troubled loan pools issued by Countrywide (acquired by BofA).  In court papers, the AG alleges that Bank of New York, as trustee overseeing the pools, misled investors into believing that the lender had delivered to the trustee complete files for every loan, when in fact it had not.  The AG also alleges that the Trustee had a conflict of interest because it would gain financially from the settlement.  Twenty two investors, including the New York Fed, support the settlement, but many others believe it is unfair.  A court hearing on the proposed settlement is scheduled for today.  NYTimes, Mortgage Settlement Challenged

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