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


Comments Closed

rss feed

Latest Stories

article imageFord Motor Company (F) Q2 Earnings Preview: Light on the Top Line?

Ford Motor Company (NYSE:F) will release its preliminary second quarter 2014 results at 6:30 a.m. EDT read on...

article imageTripadvisor Inc. (TRIP) Q2 Earnings Preview: On Target Enough?

Tripadvisor Inc. (NASDAQ:TRIP) will release its second quarter financial results after market close on read on...

article imageFacebook Inc. (FB) Q2 Earnings Preview: Scoring Big on the World Cup

Facebook Inc. (NASDAQ:FB) will post its second-quarter 2014 financial results after the market close on read on...

article imageThe Boeing Company (BA) Q2 Earnings Preview: Durable Earnings Beater

The Boeing Company (NYSE:BA) will publish its second-quarter financial results before the open of the read on...

Popular Articles

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.