BofA-Countrywide settles legacy mortgage case for $500M
According to Bloomberg, Bank of America’s (BAC) Countrywide unit secured final approval from a court to finalize a $500 million class-action settlement with investors who claimed they were sold faulty mortgage-backed securities by the subprime lender. BofA acquired Countrywide right after the housing crisis kicked off 2008. Bloomberg has more:
“An immediate cash payout that avoids the risks and expenses associated with bankruptcy, protracted litigation, appellate review, and several legal challenges militates in favor of final approval,” Pfaelzer said in her ruling yesterday. She tentatively approved the deal earlier.
The settlement resolves claims that Countrywide, the largest U.S. mortgage lender when it was taken over by Bank of America in 2008, misled investors in offering documents about the quality of the home loans that were pooled for the securities. Many of the securities had been given the highest credit ratings and lost value when they were cut to junk during the collapse of the U.S. housing market.