AIG demands stay in $8.5 billion Bank of America ruling
Ruling leaves too much unclear, objectors say
American International Group is joining a number of companies asking a New York state supreme court judge to delay the approval of an $8.5 billion agreement between Bank of America (BAC) and mortgage bond investors.
The agreement was set to be approved and entered Feb. 7, but the state justice has now scheduled a hearing Feb. 19 on the stay of entry request from those objecting to the settlement.
New York State Supreme Court Justice Saliann Scarpulla took over the case from Justice Barbara Kapnick.
Kapnick approved Bank of America’s settlement with investors in more than 500 mortgage backed security trusts, but allowed loan modifications to continue.
Bank of America is trying to clear its books of the costly portfolio of faulty mortgages it took over from Countrywide Financial.
Bank of America has been paying through the nose to deal with mortgages and related legal problems, taking the short-term pain to get that behind them. Legal costs are a key item in the bank’s balance.
The bank saw higher litigation expense reflecting continued evaluation of legacy exposures largely related to residential mortgage-backed securities litigation. Litigation expense rose to $2.3 billion in the fourth quarter of 2013 from $1.1 billion in the third quarter of 2013 and $916 million in the fourth quarter of 2012.
Those objecting to the settlement entry say that Kapnick's ruling on Jan. 31 is unclear on how the settlement payments will divided among the trusts.