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Structured Finance Litigation Blog

Bank of America to Settle RMBS Claims for $8.5 Billion

Posted in Bank of America, Bank of New York Mellon, BlackRock, Countrywide Financial, Goldman Sachs, Goldman Sachs Asset Management, ING, Institutional Investors, Invesco, Investment Banks/Deal Sponsors, MetLife Inc., Mortgage Originators, Nationwide, New York Life, PIMCO, Prudential, Trustees

On June 29, 2011, Bank of America announced that it reached an agreement to resolve nearly all of its legacy Countrywide-issued first-lien residential mortgage-backed securitization (RMBS) repurchase exposure, representing 530 trusts with an original principal balance of $424 billion. The agreement includes a cash payment of $8.5 billion to the covered trusts to be made after final court approval of the settlement. Bank of America announced that the settlement is with The Bank of New York Mellon (BNY Mellon), the trustee for the RMBS trusts covered by the settlement and is currently supported by a group of 22 major institutional investors. The settlement covers 525 legacy Countrywide first-lien RMBS trusts and five legacy Countrywide second-lien RMBS trusts with mortgage loans principally originated between 2004 and 2008 for which BNY Mellon acts as trustee or indenture trustee. The settlement resolves representations and warranties claims, as well as substantially all historical servicing-related claims, including claims related to foreclosure delays and alleged mortgage documentation issues. The trusts involved in the deal had an original principal balance of approximately $424 billion and total current unpaid principal balance of approximately $221 billion. The 22 investors that have currently committed to support the settlement include many of the major U.S. and foreign institutional investors in RMBS, including BlackRock, Goldman Sachs Asset Management, ING, Invesco, MetLife, Nationwide, New York Life, PIMCO, Landesbank and Prudential. Read Bank of America’s press release. Read WSJ article. Read the Settlement Agreement and Pleadings.