Major MBS Settlement Would Change B of A's Servicing

Bank of America's pending settlement related to hundreds of billions of dollars worth of Countrywide-issued first-lien RMBS released Wednesday would include not only an $8.5 billion cash payment to trusts involved but also about $400 million of servicing changes and improvements, according to an investor law firm involved.

The Houston-based Gibbs & Bruns LLP, which represents 22 institutional investors involved, said among other things Bank of America has agreed to move high-risk loans to "qualified" subservicing firms at the bank's own expense.

The settlement also requires the bank to pay fees to the trusts involved if it does not meet loss mitigation standards benchmarked to industry norms on the loans it continues to service. Standards involved might include, for example, a default servicing timeline.