New Jersey federal court documents filed earlier this week revealed that Prudential Insurance Co.has moved to settle its ongoing lawsuits withBank of America NA, Merrill Lynch & Co. Inc.,First Franklin Financial Group, and a number of lenders in the mortgage industry.
According to Law360, the suits, which were first filed in March 2013, alleged Bank of America and others knowingly sold Prudential $2.1 billion in low-quality mortgage-backed securities—and made false statements about them. Prudential claimed this left the company with more than 10,000 defective home loans, many that eventually went into default or foreclosure.
The suits also claimed there were deficiencies in loan-to-value ratios, owner-occupation levels, and more, and that the credit ratings touted by the defendants were “garbage,” according to federal court documents.
Many of the claims made by Prudential were dismissed earlier this year, according to Reuters, when District Judge Stanley R. Chesler heard the case in February. Chesler determined that Prudential did not effectively prove that BofA or Merrill Lynch had lied to rating agencies about the quality of their loans, and he dismissed Prudential’s negligent misrepresentation claim.
Additionally, Chesler also said Prudential’s “after-the-fact” computer analysis of securities—a key piece of evidence for the plaintiff—was unreliable.
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