Judge puts approval of BofA's $8.5 billion mortgage settlement on hold

Tue Feb 4, 2014 8:00pm EST
 
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By Karen Freifeld

NEW YORK (Reuters) - A new judge presiding over Bank of America Corp's (BAC.N: Quote) proposed $8.5 billion settlement with investors in soured mortgage securities on Tuesday postponed entering a final judgment in the case, raising the possibility of additional legal maneuvers.

Justice Saliann Scarpulla of New York state court in Manhattan, who took over the case this week, agreed to delay the decision from taking effect until at least February 19, according to lawyers involved in the case.

Scarpulla's decision came just four days after Justice Barbara Kapnick approved the settlement with the investors, who had bought securities issued by mortgage lender Countrywide Financial Corp. Bank of America acquired Countrywide during the financial crisis.

In her ruling last Friday, Kapnick said the ruling would take effect on February 7. Kapnick's decision came on her last day as a trial court judge. She was promoted to a state appeals court effective February 3, and most of her cases were handed over to Scarpulla.

On Tuesday, American International Group Inc (AIG.N: Quote), which led investors who opposed the settlement, sought a further delay. A postponement was necessary so that the "many issues that were left open" in Kapnick's decision could be litigated, AIG's lawyer, Mark Zauderer, wrote in court papers.

Scarpulla agreed to the delay at a court hearing later on Tuesday, lawyers involved in the case told Reuters.

Lawrence Grayson, a spokesman for Bank of America, declined to comment on the delay.

Kevin Heine, a spokesman for Bank of New York Mellon (BK.N: Quote), the trustee for the mortgage securities, also declined to comment.   Continued...

 
A man walks next to a Bank of America branch in New York October 24, 2012. REUTERS/Eduardo Munoz