Bank of America settles mortgage securities class action

Posted on: December 30th, 2011 by Steve Larson
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In early December, 2011, Bank of America Corp. (BAC) reached a $315 million settlement with a group of investors who sued its Merrill Lynch unit claiming they were misled about mortgage-backed securities, according to a court filing.

Holders of the asset-backed certificates sued Merrill Lynch starting in December 2008 for alleged “false and misleading” prospectus statements related to the securities, according to the complaint and a brief filed on December 5 in Manhattan federal court.

The investors said that inaccurate statements were made about qualifications of mortgage-loan borrowers, property appraisals and debt-to-income ratios of applicants, and that “the registration statement materially misrepresented the credit quality of the mortgage loans underlying the certificates.”

The $315 million will be distributed to certificate holders who submit valid claim forms, plaintiffs’ lawyers said in court papers.

The final approval hearing will be on March 21, 2012.  The lead case is Public Employees’ Retirement System of Mississippi v. Merrill Lynch & Co., 08-CV-10841, U.S. District Court, Southern District of New York (Manhattan).