By Karen Freifeld
NEW YORK May 3 The New York and Delaware
attorneys general and the U.S. housing regulator on Friday
dropped their objections to Bank of America Corp's
proposed $8.5 billion settlement with investors in Countrywide
mortgage-backed securities, according to court filings.
Other parties, including American International Group Inc
and several Federal Home Loan banks, remain opposed to
New York Attorney General Eric Schneiderman and Gregory
Strong, deputy attorney general for the Delaware Department of
Justice, said in a joint filing on Friday they were still not
endorsing the settlement.
The attorneys general were not expressing a view about the
settlement's "adequacy or the reasonableness or propriety of the
trustee's or any other party's conduct," they said.
In a separate filing, the Federal Housing Finance Agency
withdrew its conditional objection to the proposed settlement.
The deal was reached in June 2011 with 22 institutional
investors in trusts issued by Countrywide Financial, which was
acquired by Bank of America in 2008.
It was negotiated by Bank of New York Mellon Corp as
trustee for the 530 residential mortgage-securitization trusts
with an estimated $174 billion of unpaid principal.
BlackRock Inc, Metlife Inc and Allianz SE's
Pacific Investment Management Co were among the
investors who signed onto the accord, which affected all
certificate holders in the trusts.
A hearing is scheduled to begin on May 30 in New York state
court on whether the settlement should be approved.
The hearing "should provide the court an adversarial
presentation of all the available facts and legal arguments,"
the attorneys general said in their filing.
Justice Barbara Kapnick of New York state court in Manhattan
set a May 3 deadline for opponents of the settlement to file
In its notice, the FHFA did not give any reasons for its
decision to lift its conditional objection and a spokeswoman for
the agency declined comment.
New York and Delaware sought permission last year to
intervene in the case and raised questions about the "fairness
and adequacy" of the proposed settlement.
Schneiderman claimed investors would receive only pennies on
the dollar for losses suffered. He also maintained at one time
that Bank of New York Mellon had a conflict of interest because
it stood to receive financial benefits under the settlement.
At one point, Schneiderman brought fraud counterclaims
against Bank of New York Mellon, but those claims were dropped
In Friday's filing, the attorneys general said the
"adversarial proceeding might have been avoided had the trustee
provided notice to all certificate holders at an earlier point
in the settlement negotiation process."
Kevin Heine, a spokesman for Bank of New York Mellon,
declined comment. The bank maintains it has always fulfilled its
duties as trustee.
The FHFA oversees mortgage financiers Fannie Mae and
Freddie Mac, which back about half the existing U.S. home loans.
The enterprises were seized by the government in 2008 as
mortgage losses mounted.
The case is In re: Bank of New York Mellon, New York State
Supreme Court, New York County No. 651786/2011.