Photo: Bloomberg

Photo: Bloomberg

BofA Merrill unit in $315 mn mortgage settlement

BofA Merrill unit in $315 mn mortgage settlement

New York: Bank of America Corp agreed to pay $315 million to settle claims by investors who said they were misled about mortgage securities offerings by its Merrill Lynch unit.

Photo: Bloomberg

The proposed settlement, which requires court approval, was filed late Monday night with the US District Court in Manhattan.

Bank of America is the second-largest US bank. It bought mortgage lender Countrywide Financial Corp in July 2008 and Merrill six months later.

A Bank of America spokesman was not immediately available for comment. The Charlotte, North Carolina-based lender did not admit wrongdoing in agreeing to the settlement. Reuters earlier reported the size of the settlement.

Investors led by the Public Employees’ Retirement System of Mississippi pension fund had sued over their purchases of so-called mortgage pass-through certificates in 18 securities offerings involving Merrill.

They contended that the offering documents that Merrill prepared contained false statements or omitted key details about the quality of the loans backing their investments.

Many of these loans were risky, and were made by lenders such as Countrywide and the now-bankrupt IndyMac Bancorp Inc and New Century Financial Corp, the investors said. Though their securities were at first largely rated investment-grade, most eventually fell to “junk" status and lost value, they added.

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