The collapse of the housing market on the back of faulty mortgage-backed derivative investments is considered by many as a keystone element for the broader economic downfall which has come to be known as the Great Recession.
Investors and homeowners alike in California and the rest of the country were the ones who suffered. A number of large banks have since been tagged for offering up the irresponsible derivatives. Allegations of financial fraud are everywhere, but resolution of the issues is proving to be a slow and difficult undertaking.
This is not uncommon, which is why anyone pressing charges of negligence or wrongdoing by investment purveyors needs the help of an experienced attorney.
In our previous post, we touched on one of the reasons why resolution is so hard to come by in such cases. As was noted, judges are becoming increasingly reticent to sign off on negotiated settlements before they are sure of who is going to receive what and whether the settlement is really fair.
This reserve was on display again this week in Los Angeles federal court in connection with a proposed class action settlement of a mortgage-backed securities claim against Bank of America Corp. The reported deal calls for the bank to pay out $500 million to one group of investors who put money into Countrywide Financial before it was bought by Bank of America.
The judge explained during a hearing that she would hold off on a preliminary approval of the deal until she is assured that it won't have the effect of preventing plaintiffs in two other class action suits from pursuing their cases.
As in many cases such as this, attorneys representing Countrywide said the settlement was accepted because it makes good business sense and because it doesn't admit to any wrongdoing on the company's part.
Source: Bloomberg.com, "Countrywide Judge Says $500 Million Settlement Unclear," Edvard Pettersson, July 10, 2013