By RTT News,
February 01, 2014, 07:06:00 PM EDT
(RTTNews.com) - A New York state judge on Friday approved Bank of America Corp.'s ( BAC ) $8.5 billion settlement with mortgage-bond investors, according to several reports.
Bank of New York Mellon Corp. ( BK ), the trustee for more than 500 residential mortgage-securitization trusts, filed a petition in 2011 seeking approval of the settlement. The settlement aimed to resolve claims that the loans backing the bonds didn't meet their promised quality.
Investors will still be able to pursue loan-modification claims under decision.
New York State Supreme Court Justice Barbara Kapnick reportedly approved Bank of America's settlement. But, she delayed the entry of the ruling until February 7.
Kapnick qualified her approval of the agreement, allowing loan-modification claims by investors to continue. She said the trustee "abused its discretion" on that issue "without exercising their potential worth or strength."
The mortgage-backed securities were originally issued Countrywide Financial Corp., which was acquired by Bank of America in 2008.
Previously, a small group of investors, including American International Group Inc. ( AIG ), were pushing for the renegotiations on the settlement, while a group of another 22 investors, including the Federal Reserve Bank of New York, BlackRock, Inc. ( BLK ) and MetLife, Inc. (MET), deemed the settlement as fair and want it to be approved by the judge at the earliest.
Last year, Financial giant Bank Of America that it reached a $11.6 billion settlement with Fannie Mae (FNMA.OB), resolving some of the mortgage issues that have lingered since the financial crisis.
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