A major investor group that filed suit in 2011 to block an $8.5 billion mortgage-backed securities settlement between Bank of America (BAC) (Countrywide) and mortgage bond trustee The Bank of New York Mellon (BK) dropped out of the case, according to analysts with Barclays Capital (BCS).

The settlement agreement was reached between the two firms last summer to resolve legacy issues on pools of securitized mortgages that BNY Mellon oversaw for investors that acquired Countrywide.

The Walnut Place investors were not satisfied with the settlement and argued the deal precluded them from voicing concerns about the settlement and defending their own potential losses.

Barclays said Walnut Place investors filed a letter on Monday, ending their involvement in the case.

"These were among the most vocal of the intervenors/objectors to the settlement and tried to extend the scope of the discovery by asking to look at thousands of loan files, while BNY, as trustee, had argued that this was not required," wrote Barclays.

Barclays analysts say while Walnut Place was a huge part of the opposition to the BofA, BNY settlement, there are other parties that could try to pursue discovery on some of the issues tied to the settlement.

"In terms of extending discovery, we believe that investors need to pay attention to any documents filed by the larger investors still in the proceeding, such as AIG, as well as the roles played by the New York and Delaware attorneys general," Barclays wrote. "Finally, since this settlement cash needs to be paid through the REMIC structure, approval of the IRS and state tax authorities will also be required and the eventual cash flows could still get delayed if those are not forthcoming."