A New York State Supreme Court judge dismissed a lawsuit filed by investors who challenged an $8.4 billion settlement between Bank of America Corp. and state attorneys general related to predatory-lending accusations.
As part of the 2008 deal, the Charlotte, N.C., bank agreed to modify about 400,000 mortgages serviced by Countrywide Financial Corp., which was acquired by B of A. Most of those loans are owned by investors. In the suit dismissed by the New York court, bond investors sought to require that Countrywide "purchase every mortgage loan on which it agrees to reduce the payments," according to court filings. The push was aimed at shielding the investors from losses caused by the loan modifications.
In an Oct. 7 ruling, New York State Supreme Court Judge Barbara Kapnick said investors are barred from bringing the suit because they did not satisfy terms set out in pooling and servicing agreements for the bond deals. Under those agreements, investors are "expressly" prevented from bringing "any suit, action or proceeding" unless they have the agreement of 25% of the bondholders or met other procedural requirements, the judge said.