logo
  Join        Login             Stock Quote

Bank of America (BAC): Mortgage Settlement Back In State Court, But Still Not Out Of The Woods

 February 29, 2012 01:25 PM
 


Bank of America Corp. (NYSE:BAC) cleared a major hurdle in its multi-billion dollar settlement over mortgage bonds announced in June as its proposed $8.5 billion mortgage-bond settlement case has been transferred from Federal Court to the New York state court where it was originally filed.

"We see this move as a marginal positive for BofA, removing a potential roadblock to the ultimate resolution of the $8.5 billion agreement reached last summer," UBS analyst Brennan Hawken wrote in a note to clients.

The state legal provisions are expected to shorten the approval process, somewhat reducing the risk that the settlement price moves higher, and the case is dragged out for an extended period of time.

[Related -Bank Stocks: The Misbegottenness of the Volcker Rule Truly Knows No Bounds]

Last year, BofA filed a settlement in New York State Supreme Court to resolve claims of group of institutional investors, including Blackrock Inc. (NYSE:BLK) over losses they took on mortgage bonds. But, the case was moved to federal court at the request of a group of bond investors.

However, the U.S. Court of Appeals in Manhattan ruled Monday that the bank's proposed settlement should be reviewed in the state court, not federal court. The latest ruling comes after the mortgage bond trustee Bank of New York Mellon Corp. (NYSE:BK) argued the case should remain in a state court.

[Related -JPMorgan Chase & Co. (JPM): Capital Concerns Should Ease In 2014]

"While we see today's decision as reducing the overhang of a potential adverse outcome to the Bank of NY settlement, we expect challenges to the agreement are far from over, and we expect the case will take some time to resolve," Hawken said.

BofA is not out of the woods yet as BofA is exposed to large and uncertain legal liabilities in its mortgage business due to its 2008 acquisition of Countrywide Financial. The company is also struggling to contain costs in this challenging environment.

Until these issues become clearer, we believe it is difficult to determine BofA's true earnings power," said Hawken, who has a "neutral" rating and price target of $8 on BofA shares

iOnTheMarket Premium
Advertisement

Advertisement


Comments Closed


rss feed

Latest Stories

article imageXerox Corp. (XRX): An Insider’s $500,000 Insider Buy

Last week was a healthy week of insider buying as 194 companies reported purchase records. The number read on...

article imageQihoo 360 Technology Co Ltd. (QIHU) Q2 Earnings Preview: A Green Monday

Qihoo 360 Technology Co Ltd. (NYSE:QIHU) will report its second quarter 2014 financial results on Monday, read on...

article imageSix Stocks that Could Outperform in the next 90 days

Earlier today, Goldman Sachs put out its list of the 50 stocks that Matter Most. It’s a list of the 50 read on...

article imageFoot Locker, Inc. (FL) Q2 Earnings Preview: Running Past the Street View

Foot Locker, Inc. (NYSE:FL) plans to report financial results for its second quarter ended August 2, 2014 read on...

Advertisement
Popular Articles

Advertisement
Daily Sector Scan
Partner Center



Fundamental data is provided by Zacks Investment Research, and Commentary, news and Press Releases provided by YellowBrix and Quotemedia.
All information provided "as is" for informational purposes only, not intended for trading purposes or advice. iStockAnalyst.com is not an investment adviser and does not provide, endorse or review any information or data contained herein.
The blog articles are opinions by respective blogger. By using this site you are agreeing to terms and conditions posted on respective bloggers' website.
The postings/comments on the site may or may not be from reliable sources. Neither iStockAnalyst nor any of its independent providers is liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein. You are solely responsible for the investment decisions made by you and the consequences resulting therefrom. By accessing the iStockAnalyst.com site, you agree not to redistribute the information found therein.
The sector scan is based on 15-30 minutes delayed data. The Pattern scan is based on EOD data.