A federal judge in Los Angeles on Friday approved a $601.5 million settlement of a class-action suit against Countrywide Financial Corp, one of the largest class-action settlements stemming from the subprime mortgage crisis, a lawyer for the plaintiffs said.
The case, filed in 2007, alleged that Countrywide, now a unit of Bank of America Corp, misled investors about its financial condition and lending practices, failing to disclose the extent of subprime loans it held. The settlement approved on Friday by Judge Mariana Pfaelzer includes an additional so-called "set aside" of $22.5 million, which Bank of America can use to settle future cases with investors who opted out of the class action.
If it is not used in two years, it will go to the shareholders in the current settlement. Joel Bernstein, a partner at Labaton Sucharow who represented the lead plaintiffs, said it was an "excellent settlement" for the class. "If these institutions who opted out decide to bring their own cases, they will have their own battles," he said.
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