NEW YORK, July 12 (Reuters) - New York's attorney general
is investigating Bank of America Corp's $8.5 billion settlement
with investors over losses in mortgage-backed securities, and
has sought data from 20 institutional investors that agreed to
In letters to the firms, Attorney General Eric Schneiderman
requested the names of various clients -- including pension
funds, government authorities and charities affiliated with the
state -- that invested in securities issued by the 530 mortgage
securitization trusts covered in the accord. He also sought the
par and current market values of the clients' securities.
The letters are dated July 7, and were sent in connection
with the attorney general's "ongoing investigation" into the
securitization of residential mortgages. Schneiderman requested
that the information be provided by July 14.
Among the investors were BlackRock Inc, MetLife Inc and
Allianz SE's Pacific Investment Management Co. Of the 22
investors that agreed to the accord, only the Federal Reserve
Bank of New York and the Federal Home Loan Banks were not sent
letters by Schneiderman.
Schneiderman's office and representatives of Bank of
America and BlackRock declined to comment. A MetLife spokesman
said that insurer has not seen a letter from Schneiderman.
Pimco did not immediately respond to a request for comment.
Reuters obtained copies of the letters on Tuesday.
Various attorneys general are scrutinizing the causes of
and fallout from excess in mortgage securitizations, a key
driver of the recent housing and financial crises.
Regulators including all 50 state attorneys general are
also working on an expected multi-billion dollar settlement
with large mortgage servicers over foreclosure practices.
IS IT FAIR?
The $8.5 billion settlement announced June 29 was part of
roughly $20 billion of charges that Bank of America hopes will
resolve much of its legal liability from its 2008 purchase of
mortgage lender Countrywide Financial Corp.
But the accord has drawn challenges from some Countrywide
mortgage securities investors who question whether the accord
is fair, or may provide some investors with windfalls.
The settlement requires approval by New York State Supreme
Court Justice Barbara Kapnick in Manhattan.
In court filings this week, the institutional investors
rejected various criticisms by a group of pension funds and 11
companies sharing the name Walnut Place, which own Countrywide
securities in some trusts covered by the accord.
The institutional investors called "ludicrous" a claim that
they engineered a gentle settlement to help Bank of America,
which many of them regularly do business with in other areas.
They also said that to exclude some trusts from the accord
would deprive investors in those trusts of other benefits,
including servicing improvements that could lead to fewer
foreclosures and higher values for their mortgage securities.
On Monday, Congressman Brad Miller, a Democrat and member
of the House Financial Services Committee, questioned whether
taxpayers might end up on the hook for excessive losses through
the ownership by government-run Fannie Mae and Freddie Mac of
securities covered in the settlement.
Bank of New York Mellon Corp is the trustee for the 530
trusts, and has called the settlement "reasonable." A spokesman
for that bank also declined to comment.
The case is In re: The Bank of New York Mellon, New York
State Supreme Court, New York County, No. 651786/2011.
For Bank of New York, as trustee: Jason Kravitt, Hector
Gonzalez and Matthew Ingber of Mayer Brown.
For Walnut Place: David Grais, Owen Cyrulnik & Leanne
Wilson of Grais & Ellsworth.
(Reporting by Jennifer Ablan, Ben Berkowitz, Ross Kerber,
Joe Rauch and Jonathan Stempel)