Small Houston Firm Stands to Get $85M if BofA Settlement Is Approved
Corrected: If the proposed $8.5 billion New York state court settlement between Bank of America Corp. and mortgage bondholders is approved, the small Houston law firm representing the plaintiffs will receive $85 million, the Houston Chronicle reports.
Kathy Patrick, a partner with Gibbs & Bruns, represents the 20 bondholders. The group includes two of her long-term clients, BlackRock Financial Management and Pacific Investment Management Company. In October, the group demanded that Bank of America repurchase home loans packaged into bonds by Countrywide Financial Corp., which Bank of America acquired in 2008.
The clients came to Gibbs & Bruns, Patrick told the Chronicle, in part because most major New York law firms are somehow connected to big banks involved in the financial crisis. Also, Reuters reports, Patrick assembled a group of major institutional investors that Bank of New York Mellon, Bank of America’s trustee on securitizations, couldn’t ignore.
The settlement agreement (PDF) is awaiting approval from the New York County Supreme Court of the State of New York. It also includes an agreement that the defendants will improve the way borrowers receive services when they need to work out problems with individual loans. Patrick told the Chronicle that the agreement was designed as a model to help lenders resolve current complaints, and avoid future problems.
Updated at 2:45 p.m. to correct the amount that Gibbs & Bruns would be paid if the settlement is approved to $85 million.
Correction
Updated at 2:45 p.m. to correct the amount that Gibbs & Bruns would be paid if the settlement is approved to $85 million.
