Triaxx Funds Drop Objections to $8.5 Billion BofA PactChris Dolmetsch and Jody Shenn
A group of funds known as the Triaxx entities withdrew their objection to Bank of America Corp.’s $8.5 billion mortgage-bond settlement with investors, removing the biggest impediment to the overall approval of the accord.
State Supreme Court Justice Barbara Kapnick in Manhattan approved the settlement in January, ending claims by investors in more than 500 residential mortgage-securitization trusts that the loans backing the bonds didn’t meet their promised quality, while allowing claims over loan modifications to continue.
Triaxx said the settlement failed to cover claims that as much as $31 billion of loans were improperly modified and appealed the ruling in March. The funds said in a court filing yesterday they were withdrawing from the case. It’s not clear if the funds withdrew due to a separate settlement with Bank of America or other reasons, Nomura Securities International analysts including Paul Nikodem wrote in a note to clients.
“As the resolution of modification repurchase claims raised by Triaxx was the largest impediment to approving the settlement in its entirety, this event is a very positive sign for RMBS bondholders,” the analysts said. Other objectors mentioned similar claims in their appeal, they said, “so it’s not obvious that Triaxx’s withdrawal completely resolves this issue.”
John G. Moon, an attorney with Miller & Wrubel PC in New York representing the Triaxx entities, declined to comment on the filing. Lawrence Grayson, a spokesman for Charlotte-based Bank of America, also declined to comment.
The settlement is part of Bank of America’s push to resolve liabilities tied to faulty mortgages that have cost it at least $55 billion since the financial crisis, most inherited with its 2008 purchase of Countrywide Financial Corp.
American International Group Inc., the largest commercial insurer in the U.S. and Canada, withdrew its objections in July after settling with the bank for $650 million. AIG had sued Bank of America for $10 billion in damages in 2011.
Pools of home loans securitized into bonds were a central part of the housing bubble that helped send the U.S. into the biggest recession since the 1930s. The housing market collapsed and the crisis swept up lenders and investment banks as the market for the securities evaporated.
Countrywide Financial, based in Calabasas, California, was the biggest U.S. residential home lender before the collapse, originating or purchasing mortgages valued at about $1.4 trillion from 2005 to 2007. The bulk of them were sold to investors as mortgage-backed securities.
The case is In the matter of the application of the Bank of New York Mellon, 651786/2011, New York State Supreme Court, New York County (Manhattan).