The Federal Housing Finance Agency - regulators for Fannie Mae and Freddie Mac - has filed objections against Bank of America's $8.5bn MBS settlement.  This follows similar objections filed on Monday by the FDIC. 

The FHFA started off its court filing on a positive note, noting that the the settlement, which calls for improving loan servicing and fixing deficient documentation, is a positive element.  The support of many large market participants also is "encouraging." 

Yet, like many others before it, the FHFA said it lacks enough information about the accord, and wants to be ready to voice a "substantive" objection "should a now unforeseen issue arise" that hurts Fannie Mae and Freddie Mac.

The complaint further notes that, "The settlement agreement will speed up foreclosures, perpetuate existing servicing abuses in the system, and undermine federal programs designed to stabilize the housing market," the complaint said.

Meanwhile, the homeowners, who say they have received default notices, seek class-action status for Countrywide borrowers from 2004 to 2008 whose loans are in the trusts and are serviced by Bank of America."

The state case is: In re: The Bank of New York Mellon, New York State Supreme Court, New York County, No. 651786/2011.

The federal case is: The Bank of New York Mellon et al v. Walnut Place LLC et al, U.S. District Court, Southern District of New York, No. 11-05988. The homeowner case is Iesu et al v. The Bank of New York Mellon et al, U.S. District Court, Southern District of New York, No. 11-06078.    [Reuters, 8/30/11]