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New York attorney general investigates Bank of America $8.5B mortgage pact

New York’s attorney general is investigating Bank of America Corp.’s proposed $8.5 billion settlement with holders of mortgage-backed securities, according to news reports.

Reuters reports that Eric Schneiderman has sought data from 20 institutional investors that agreed to the accord.

According to the story, Schneiderman has sent letters to the firms requesting the names of clients — from pension funds to government authorities and charities affiliated with the state — who invested in securities issued by the 530 mortgage securitization trusts covered in the settlement.

The settlement was designed to resolve claims by investors that the bank sold bonds based on substandard mortgages. The bank reached the settlement to appease investors who want the bank to buy back defective Countywide Financial loans off of which mortgage-backed bonds were sold.

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