Friday, December 6, 2013
The Associated Press
NEW YORK - As soon as Bank of America puts one mortgage-related lawsuit behind it, another always seems to rear its head.
The bank announced Wednesday that it would pay $500 million to settle a class-action lawsuit led by pension funds and other investors who say they were misled about $350 billion worth of mortgage-backed investments they bought from Countrywide, a mortgage lender Bank of America bought in 2008. The bank portrayed the settlement as good news because it resolved the bulk of securities claims related to residential mortgage-backed securities.
But financial analysts, in a conference call to discuss the bank's first-quarter results, peppered bank executives with questions about another pending settlement. Bank of America is still waiting for court approval for a similar settlement it made with Bank of New York Mellon almost two years ago.
If it doesn't get the go-ahead, Bank of America could have to spend more to resolve the claims.
Bank of America's stock slumped nearly 5 percent to $11.70, which were just shy of what analysts expected.
Bank of America's current troubles are the latest fallout from its decision to buy Countrywide, which was known for making exotic mortgages that later went bad as borrowers defaulted.