NEW YORK – NCUA and more than three dozen other investors on Monday lodged objections to Bank of America Corp's $8.5 billion settlement of claims over losses on mortgage-backed securities, joining a growing list of investors and regulators that are challenging the deal.
NCUA, which holds some $50 billion of toxic MBS once owned by five failed corporate credit unions, told a federal court it is intervening because it does not have enough information to evaluate the settlement.
NCUA joins several other regulatory entities left holding the bag on failed MBS that are objecting to the landmark settlement, including the FDIC, and the Federal Housing Finance Agency, the regulator for Fannie Mae and Freddie Mac. Other MBS investors opposed to the deal include six different Federal Home Loan Banks; Goldman Sachs & Co. and Ambac Assurance.
The settlement surrounds MBS sold by Countrywide Financial, the mortgage giant that was acquired by Bank of America in 2009. Bank of New York Mellon Corp, the trustee handling the 530 trusts with $174 billion of unpaid principal balances, had negotiated the settlement with 22 institutional investors including the Federal Reserve Bank of New York, Metropolitan Life Insurance, BlackRock Financial and Pimco.
Countrywide was the biggest seller of MBS to WesCorp FCU, the one-time $34 billion corporate, that was taken over by NCUA in March 2009. NCUA said it is intervening in the case on behalf of the estate of WesCorp and four other corporate failures, U.S. Central FCU, Members United Corporate FCU, Southwest Corporate FCU and Constitution Corporate FCU.
NCUA has filed civil suits against three Wall Street firms, JP Morgan Chase, RBS Securities and Goldman Sachs, over MBS they sold to the failed corporates, but has yet to file suit against BofA.
