The New York and Delaware attorneys general urged a judge to approve their participation in litigation over Bank of America Corp.'s $8.5-billion settlement with mortgage-bond investors.
New York Atty. Gen. Eric Schneiderman and Delaware Atty. Gen. Beau Biden have criticized Bank of America's proposed settlement and asked Justice Barbara Kapnick of New York State Supreme Court in Manhattan on Tuesday to approve their requests to intervene in the case.
"This is a massive waiver of liability for Bank of America and Countrywide," Steven Wu, a lawyer with the New York attorney general's office, told Kapnick.
Schneiderman says the settlement, reached with investors in Countrywide Financial Corp. mortgage bonds, is unfair and settles investor claims for "a small fraction" of losses.
Biden said intervention should be approved because the settlement, which includes provisions for servicing mortgage loans, affects homeowners who aren't involved in the case. The servicing proposals are vague and don't provide an incentive for servicers to help struggling borrowers, the office said in court papers.
BNY Mellon and the institutional investor group that negotiated the settlement, which includes BlackRock Inc. and Pacific Investment Management Co., opposed the interventions. The investor group argued that the attorneys general don't have standing to intervene in a private contract dispute.