Bank of America Corp (BAC.N) has rejected a bid to re-open negotiations into its proposed $8.5 billion settlement with investors in mortgage securities, indicating it plans to take its chances that a New York judge will approve the deal.
American International Group Inc (AIG.N) and the Federal Home Loan Banks of Boston, Chicago and Indianapolis, which object to the settlement, sent a letter to Bank of New York Mellon Corp (BK.N), the trustee overseeing the securities.
The letter, which was filed in New York State Supreme Court on Thursday, requested immediate settlement discussions.
"We are willing and available now to discuss ... how to best construct an open, fair and transparent process," Daniel Reilly, a lawyer for AIG, and Derek Loeser, a lawyer for the home loan banks, wrote.
AIG and other objectors complained that the accord offered them only a fraction of what they lost, and was negotiated without them.
Justice Barbara Kapnick, who is hearing testimony to decide whether to approve the settlement, had asked the parties to consider mediation rather than wait for her to rule.
Kapnick made the request on June 14 before a break in the proceeding, which resumes July 8, the letter said.
Bank of America had agreed to the settlement two years ago to resolve the claims of investors in bonds issued by mortgage lender Countrywide Financial Corp, which it bought in 2008.
It hopes a settlement, if approved, will resolve much of its remaining legal obligations stemming from Countrywide.
The Charlotte, North Carolina-based bank paid $2.5 billion for Countrywide, but the purchase became an albatross and has cost the bank tens of billions of dollars for litigation, loan buybacks and other mortgage-related costs.
Twenty-two institutional investors, including BlackRock Inc (BLK.N), MetLife Inc (MET.N) and Allianz SE's (ALVG.DE) Pacific Investment Management Co entered into the settlement.
The case is In re: Bank of New York Mellon, New York State Supreme Court, New York County, No. 651786/2011.