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Judge approves $500M Bank of America settlement

A judge has given final approval to a $500 million Bank of America settlement with investors who alleged its Countrywide unit misled them in the offering documents for mortgage bonds.

U.S. District Court Judge Mariana Pfaelzer, in California, granted approval of the settlement Thursday, despite earlier objections from the Federal Deposit Insurance Corp. and others.

The settlement resolves claims made by investors, including pension funds and the Maine State Retirement System. It also resolves the first mortgage-backed securities lawsuit brought in the wake of the financial crisis, according to court records.

The case began as lawsuit that was filed in California in 2007 and later consolidated with other cases. The investors claimed the registration statements, prospectuses and other documents for the 429 mortgage-backed securities offerings contained “materially false and misleading” statements and made important omissions.

The settlement won preliminary approval in August. The FDIC was among objectors. According to the FDIC, the deal was “not fair, reasonable and adequate for the class as a whole.”

Bank of America Chief Financial Officer Bruce Thompson said in an earnings call in October that the $500 million settlement amount represents 65 to 70 percent of the bank’s residential mortgage-backed securities legal exposure.

“We are pleased to resolve this matter,” bank spokesman Lawrence Grayson said Friday.

It’s the second settlement for Bank of America this week. On Monday, Bank of America announced a $404 million settlement with Freddie Mac over mortgage-repurchase claims. The bank said the agreement resolves all requests to buy back defective mortgages sold to Freddie from Jan. 1, 2000, to Dec. 31, 2009.

Roberts: 704-358-5248; Twitter: @DeonERoberts
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