Bank of America Corp. reached a $315 million settlement with a group of investors who sued its Merrill Lynch unit claiming they were misled about mortgage- backed securities.
According to a court filing, holders of the asset-backed certificates sued Merrill Lynch in December 2008 claiming false and misleading prospectus statements related to the securities.
The investors argued that inaccurate statements were made about qualifications of mortgage-loan borrowers, property appraisals and debt-to-income ratios of applicants, and that the registration statement materially misrepresented the credit quality of the mortgage loans underlying the certificates.
In turn, Merrill Lynch, bought by Bank of America in 2009, argued investor losses were the result of the overall economic downturn, housing-price declines and reduced liquidity.
The litigation included review and analysis of more than 20 million pages of documents. A final hearing of the settlement will be held on March 21. The $315 million will be distributed to certificate holders who submit valid claim forms.
