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Home loan banks drop objection to $8.5B settlement

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Three federal home loan banks have dropped their opposition to Bank of America Corp.’s $8.5 billion settlement in a New York state court lawsuit over Countrywide residential mortgage-backed securities.

Lawyers for the Federal Home Loan Banks of Boston, Chicago and Indianapolis on Wednesday told New York Supreme Court Judge Barbara Kapnick they are withdrawing from the case.

Also Wednesday, lawyers for Cranberry Park LLC and Cranberry Park LLC II, funds, which in August said they owned Countrywide securities with an original principal value of more than $1 billion, asked the judge for permission to withdraw their previous objection to the settlement.

The settlement between Bank of New York Mellon Corp., as trustee for the securities, and Bank of America’s Countrywide, resolves claims the mortgage lender breached its contractual obligation to repurchase delinquent mortgages that were pooled for the securities.

Lawrence Grayson, a spokesman for Charlotte, N.C.-based Bank of America, declined to comment on the filings.

The Federal Home Loan Bank of Indianapolis is one of 12 regional banks that make up the Federal Home Loan Bank System. The government-sponsored banks give financial institutions access to low-cost funding. The Indianapolis bank is owned by Indiana and Michigan financial institutions.

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