Appeal sped up over BofA $8.5 billion MBS accord (Reuters)

(Reuters) – A U.S. appeals court on Wednesday sped up the review of a ruling that moved consideration of Bank of America Corp's (BAC.N) $8.5 billion settlement over mortgage debt to federal court from a New York state court.

The decision by the 2nd U.S. Circuit Court of Appeals in New York could help Bank of America, which intended the accord to address much of its remaining legal liability from its 2008 purchase of the mortgage lender Countrywide Financial Corp.

Bank of New York Mellon Corp (BK.N), which as trustee negotiated the accord, and investors such as BlackRock Inc (BLK.N) and MetLife Inc (MET.N) are hoping to reverse an October 19 ruling by U.S. District Judge William Pauley in Manhattan moving the case to his court from a New York state court.

Pauley said he took the case because it implicated "paramount federal interests" such as the integrity of nationally chartered banks and the vitality of financial markets.

The settlement applied to 530 mortgage securitization trusts with $174 billion of unpaid principal. It was intended to address claims by investors who said the seemingly safe securities that they bought proved toxic because they were backed by risky home loans that were underwritten poorly.

Bank of New York Mellon had negotiated the accord with 22 institutional investors including BlackRock and MetLife.

But objections were raised by many investors that were not part of the talks but would be bound by the outcome, including a group called Walnut Place.

Some of these investors said the $8.5 billion payout was too low. Moving the case to federal court could potentially make it easier to back out, or negotiate higher payouts.

In court papers, Bank of New York Mellon countered that delaying the appeal would "disrupt a settlement that is of enormous importance to investors."

Fallout from the Countrywide purchase has weighed on the share price of Charlotte, North Carolina-based Bank of America, which on Tuesday fell to its lowest level since March 2009.

Shares of the second-largest U.S. bank rose 37 cents, or 7.3 percent, on Wednesday to close at $5.44.

The 2nd Circuit did not say when it would consider the appeals. Bank of America was not part of either motion seeking expedited appeal.

The cases are Bank of New York Mellon v. Walnut Place LLC et al, 2nd U.S. Circuit Court of Appeals, Nos. 11-4554 and 11-4571.

(Reporting by Jonathan Stempel in New York)

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FDIC objects to Bank of America $8.5 billion mortgage accord (Reuters)

NEW YORK (Reuters) – The FDIC and more than three dozen other investors on Monday lodged objections to Bank of America Corp's $8.5 billion settlement of claims over losses on mortgage-backed securities, joining a growing list of investors and regulators that are challenging the accord.

In its filing with the U.S. District Court in Manhattan, the FDIC said it is "the receiver of numerous banks and owner of many certificates" issued by many of the 530 mortgage pools of the former Countrywide Financial Corp that the settlement covers.

The FDIC, whose full name is the Federal Deposit Insurance Corp, said it is intervening because it does not have enough information to evaluate the settlement.

Other investors that objected on Monday included a variety of banks, insurers and investment funds. Among them are Jeffrey Gundlach's money management firm Doubleline Capital LP, and the banking unit of Wayne, New Jersey's Valley National Bancorp.

Bank of New York Mellon Corp, the trustee handling the 530 trusts with $174 billion of unpaid principal balances, had negotiated the settlement with 22 institutional investors including the Federal Reserve Bank of New York, BlackRock Inc and Allianz SE's Pimco.

The June 29 accord was intended to resolve much of Bank of America's remaining legal liability tied to its 2008 purchase of Countrywide, once the nation's largest mortgage lender.

But dozens of investors who did not negotiate but would be bound by the accord have said the payout is too low, or that they lack enough information to know whether it is fair. Two state attorneys general, New York's Eric Schneiderman and Delaware's Beau Biden, also have expressed objections.

A New York state judge is scheduled to consider whether to approve the settlement on November 17, but some investors want the case handled in federal court.

Bank of America spokesman Lawrence Grayson said that bank believes the trustee acted reasonably, and that there are "compelling reasons" for the settlement to be approved. Bank of New York Mellon spokesman Kevin Heine did not immediately respond to an email request for comment.

The state case is In re: The Bank of New York Mellon, New York State Supreme Court, New York County, No. 651786/2011. The federal case is The Bank of New York Mellon et al v. Walnut Place LLC et al, U.S. District Court, Southern District of New York, No. 11-05988.

(Reporting by Jonathan Stempel; editing by Carol Bishopric, Phil Berlowitz)

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