(Reuters) – A judge questioned why Bank of America Corp’s $8.5 billion
settlement with mortgage securities investors was being rushed for approval and
whether the trustee that negotiated it treated investors fairly.
U.S. District Judge William Pauley set a September 21 hearing to consider
requests from some investors to move the case to Manhattan federal court from a
New York state court, where the trustee Bank of New York Mellon Corp wants it
handled.
That timetable is slower than Bank of New York Mellon wanted and could
imperil a scheduled November 17 hearing before New York State Supreme Court
Justice Barbara Kapnick to consider approving the settlement.
“It strikes me there are some novel and complex issues,” Pauley said at a
hearing on Thursday. “The court would benefit from some fulsome
briefing.”
A delay could help unhappy investors learn more through additional
litigation, which could lead to higher payouts.
“There’s nothing special about the dates,” said Owen Cyrulnik, a lawyer for
11 investment entities sharing the Walnut Place name that have challenged the
accord. “None of these dates are set in stone.”
The settlement covers 530 mortgage pools with $174 billion of unpaid
principal balances from Countrywide Financial Corp, which was the largest U.S.
mortgage lender before Charlotte, North Carolina-based Bank of America bought it
in 2008.
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