FDIC Against Proposed Countrywide Settlement

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FDIC Against Proposed Countrywide Settlement

The FDIC recently advised a U.S. District Court Judge to reject the proposed $500 million class-action settlement between Bank of America Corp.’s Countrywide unit and investors due to the relatively small percentage of the settlement that will go the investors, Bloomberg.com reported.

The FDIC stated in their filing that only $41 million dollars would go to 91% of the investor plaintiffs from the settlement, with $85 million dollars going to the attorneys for the lead plaintiffs.

The Bloomberg.com article further states the FDIC found the entire $500 million dollar settlement amount to be lacking. The face value of the securities comprising the suit is $450.7 billion dollars.

The article states that other similar mortgage-backed securities actions have recovered an average of 1.1 percent of the face value of the securities while this settlement would only provide 0.11 percent of face value.

The settlement provides, after attorneys’ fees, $267 million for claims by investors in the initial lawsuits, leaving $111 million for investors whose claims were filed too late, according to the article. A hearing on final approval for the settlement is scheduled for Oct. 28.

If you or someone you know has lost money as a result of an investment, please contact Richard Frankowski at 205-747-1903 to discuss your potential legal remedies.

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