FDIC says settlement too small in BofA RMBS suit
Oct. 10, 2013 – Claiming too small a settlement, FDIC is asking a federal judge to reject a class-action settlement between Bank of America Corp.’s Countrywide and investors in defunct residential mortgage-backed securities.
Nineteen banks that owned the Countrywide securities have since failed and remain in FDIC receivership. As reported by Bloomberg, FDIC said the $500 million settlement “is too small because it represents only about 0.11 percent of the $450.7 billion face value of the securities it covers.” The FDIC said in previous settlements of RMBS cases, settlements have averaged 1.1 percent of the face value of the securities.
This settlement covers three class-action lawsuits where investors in Countrywide claimed the lender lied in its offering documents for the securities.
Federal district Judge Mariana Pfaelzer gave preliminary approval to the settlement in August. A hearing on final approval is scheduled for Oct. 28.