Bank Of America To Set Aside $14 Billion To Settle RMBS Claims

CHARLOTTE, N.C. - (Mealey's)  Bank of America Corp. will pay $8.5 billion to settle claims regarding "nearly all of the legacy Countrywide-issued first-lien residential mortgage-backed securitization (RMBS) repurchase exposure, representing 530 trusts with original principal balance of $424 billion," according to a press release announcing the deal issued June 29.

Bank of America representative Jerry Dubrowski told Mealey Publications that the settlement came about as the result of a letter written to Bank of America and The Bank of New York Mellon (BNY Mellon) by Gibbs & Bruns LLP, which represents a group of institutional investors who are supporting the settlement. 

Dubrowski said BNY Mellon will file a petition in New York state court seeking approval of the settlement agreement. 

According to the press release, Bank of America "also intends to record an additional $5.5 billion provision to its representations and warranties liability for both Government-Sponsored Enterprises (GSE) and non-GSE exposures in the second quarter of 2011." 

Bank of America reached the settlement with BNY Mellon, which is serving as trustee for the RMBS trusts.   

According to the press release, "[t]he settlement covers 525 legacy Countrywide first-lien RMBS trusts and five legacy Countrywide second-lien RMBS trusts with mortgage loans principally originated between 2004 and 2008 for which BNY Mellon acts as trustee or indenture trustee.  The settlement resolves representations and warranties claims, as well as substantially all historical servicing-related claims, including claims related to foreclosure delays and alleged mortgage documentation issues." 

"These trusts had an original principal balance of approximately $424 billion and total current unpaid principal balance of approximately $221 billion." 

A total of 22 investors have committed to support the settlement, according to the press release. 

The press release is available online at http://investor.bankofamerica.com/phoenix.zhtml?c=71595&p=irol-newsArticle&ID=1580643&highlight=. 

[Editor's Note:  Full coverage will be in the July issue of Mealey's Emerging Securities Litigation.  For all of your legal news needs, please visit www.lexisnexis.com/mealeys.] 

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