Investor group extends talks with BofA over Countrywide MBS
Barclays Capital (BCS) analysts expect investors holding Countrywide Financial bonds to hold out for a favorable settlement from Bank of America (BAC) as they try to recover losses on mortgage-backed securities. Bank of America acquired Countrywide, assuming its entire subprime mortgage portfolio, in the heat of the 2008 credit crunch. Barclays analysts expect investors to draw out the process until they get a preferred settlement. Barclays said, "the group is still taking a measured and deliberative approach – likely to attract more members before aggressively going after claims or purely to create pressure on Bank of America. The bank, for its part, seems to be delaying and at one point also offered a very low settlement amount that the investor group reportedly rejected." The group is larger than reported a few months back, with investors now owning $86 billion in paper, Barclays analysts said Friday. The group, which includes some of the world's largest money managers and the Federal Reserve Bank of New York, grew to 20 members, according to Barclays. The group recently rejected a low settlement offer from Bank of America on their claims over Countrywide paper. The Wall Street Journal reported earlier this week the settlement talks were set to expire Monday but will now be extended for 30 days. Write to Kerri Panchuk.