Bank of America Announces Massive $8.5 Billion Mortgage-Backed Securities Settlement : The D & O Diary

Kevin LaCroix reports.

Bank of America Announces Massive $8.5 Billion Mortgage-Backed Securities Settlement : The D & O Diary: "The deal itself involves a settlement with the Bank of New York Mellon as trustee to 530 RMBS trusts having an original principal balance of $424 billion and unpaid principal balance of $221 billion. According to the Wall Street Journal’s account of the deal, the dispute had begun with a demand last October from a law firm representing 22 institutional investors.



The investors had demanded that BofA repurchase mortgages that had been packaged into securities, basing their demand on allegations of “breaches of representations and warranties contained in the Governing Agreements with respect to the Covered Trusts (including alleged failure to comply with underwriting guidelines (including limitations on underwriting exceptions), to comply with required loan-to-value and debt-to-income ratios, to ensure appropriate appraisals of mortgaged properties, and to verify appropriate owner-occupancy status), and of the repurchase provisions contained in the Governing Agreements. ”Although the original demand was on behalf only of the 22 investors, the settlement is on behalf of virtually all investors in the trusts."