NEW YORK, July 13 (Reuters) - A third investor plaintiff is seeking to intervene in Bank of America Corp's $8.5 billion settlement with investors in soured mortgage-backed securities, signaling growing opposition to the accord.
TM1 Investors LLC said it may sue to force the largest U.S. bank to buy back securities that were once worth more than $400 million and are backed by home loans from Countrywide Financial Corp, which Bank of America bought in 2008.
The opposition was expressed in a filing in the New York State Supreme Court in Manhattan.
Eric Schneiderman, the state attorney general, has asked 20 investors that participated in the settlement -- including BlackRock Inc, MetLife Inc and Allianz SE's Pacific Investment Management Co -- for information about their involvement, a sign he may challenge the accord.
In its filing, TM1 said it is unconvinced that Bank of New York Mellon Corp, trustee for the 530 mortgage pools covered in the settlement, adequately protected its rights in helping negotiate the accord.
"After much investigation, TM1 believes that many of the loans that Countrywide sold to the trust in which it owns securities did not comply with the representations and warranties" made about them, its lawyer David Grais wrote in the filing.
"As a result," Grais continued, "TM1, together with one or more investors in the same trust, is considering legal action on behalf of that trust to enforce Countrywide's obligation to repurchase those defective loans."
The $8.5 billion settlement covers mortgages with a $174 billion unpaid principal balance, about 5 cents on the dollar.
Bank of America spokesman Lawrence Grayson declined to comment on TM1's filing. Grais declined to comment.
Other objections to the accord have come from companies known as Walnut Place LLC, which Grais' firm represents, and from a group of public pension funds that said some investors could get a "windfall."
If the settlement wins court approval, affected investors would not be allowed to "opt out." Walnut Place would have to drop its February lawsuit against Bank of America over its securities, once worth $1.06 billion.
New York State Supreme Court Justice Barbara Kapnick in Manhattan scheduled a Nov. 17 hearing on the settlement.
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 Jonathan Stempel; Additional reporting by Joe Rauch)