US schemes settle with Countrywide over mortgage-backed securities
NORTH AMERICA – Four pension funds in the US have reached a $500m (€385m) settlement over losses sustained on mortgage-backed security investments made with Countrywide Financial Corporation, which has since been acquired by Bank of America Corporation.
The four schemes are the Orange County Employees Retirement Association (OCERS), the Iowa Public Employees Retirement System, the Oregon Public Employees Retirement Fund and the General Board of Pensions of the United Methodist Church.
The lead plaintiff on the lawsuit was Iowa PERS, which invested $284m with Countrywide.
Oregon PERF invested $200m in the strategy over a three-year period from 2005 to 2007, while Orange County Employees invested $10m.
According to a pension fund document, after Iowa PERS invested in the mortgage-backed securities, they were downgraded to 'junk' status.
Steve Delaney, chief executive at Orange County Employees, said: "We are excited to announce a significant recovery in this matter on behalf of OCERS and the other plaintiffs.
"This settlement reflects the outstanding result for investors who purchased Countrywide [mortgage-backed security] offerings."
The settlement must be reviewed and approved by Judge Mariana Pfaelzer in the US District Court in Los Angeles.
The actual amount awarded to each pension fund will not be known until the claims administration process is completed.
The amount of individual investor recovers will depend on the number of claimants and the amount of damages claimed by investors.