BofA to Settle Mortgage Securities Action for $315 Million
Bank of America Corp. (BAC) reached a $315 million settlement with a group of investors who sued its Merrill Lynch unit claiming they were misled about mortgage- backed securities, according to a court filing.
Holders of the asset-backed certificates sued Merrill Lynch starting in December 2008 for alleged “false and misleading” prospectus statements related to the securities, according to the complaint and a brief filed yesterday in Manhattan federal court.
The investors said that inaccurate statements were made about qualifications of mortgage-loan borrowers, property appraisals and debt-to-income ratios of applicants, and that “the registration statement materially misrepresented the credit quality of the mortgage loans underlying the certificates.”
The $315 million will be distributed to certificate holders who submit valid claim forms, plaintiffs’ lawyers said in court papers.
Lawrence Grayson, a Bank of America spokesman, said in a phone interview that the company had no comment on the settlement.
Merrill Lynch, bought by Bank of America in 2009, said investor losses were the result of “the overall economic downturn, housing-price declines and reduced liquidity,” according to settlement papers.
The investors’ attorneys requested a final hearing on March 21 to approve the settlement.
The litigation included “review and analysis of more than 20 million pages of documents,” David Stickney, a lawyer for the investors, said in court papers.
The lead case is Public Employees’ Retirement System of Mississippi v. Merrill Lynch & Co., 08-CV-10841, U.S. District Court, Southern District of New York (Manhattan).
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