Bank of America Corp. (BAC: Quote) and a group of investors scored a victory Monday in getting their proposed $8.5 billion mortgage-bond settlement case transferred from a U.S. Appeals court to the New York state court where it was first filed.
The bank had filed the settlement in New York State Supreme Court last year to resolve claims from the group of institutional investors, including BlackRock Inc. (BLK: Quote), over losses they took on mortgage bonds.
The U.S. Court of Appeals in Manhattan ruled Monday that the bank's proposed settlement with the investor group in mortgage bonds of Countrywide Financial Corp., which Bank of America bought in 2008, should be reviewed in the state court, not federal court.
The case was initially set for consideration at a November 2011 hearing, but before that, it was moved to federal court by a group of bond investors under the name Walnut Place. Those investors alleged that the bank reached a backroom deal with big investors but left out thousands of others.
The latest ruling comes after Bank of New York Mellon Corp. (BK: Quote), the mortgage bond trustee and the party that actually settled with Bank of America, argued the case should remain in a state court.
The appeals court now overturned a lower court ruling, noting that "the case was not removable from state court and must be remanded."
Bank of America shares closed Monday's trading at $8.04, up $0.16 or 2.03 percent.
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by RTT Staff Writer
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