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ALBANY, N.Y. — A New York judge on Friday approved most of the $8.5 billion Bank of America settlement over investor losses from mortgage-backed securities, concluding that trustee Bank of New York Mellon acted reasonably with one exception.
Critics of the settlement had argued that it represented only a fraction of the losses.
State Supreme Court Justice Barbara Kapnick wrote that BNY Mellon ‘‘did not abuse its discretion’’ in entering the 2011 settlement agreement and did not act in bad faith. However, she said the trustee acted unreasonably in settling loan modification claims without investigating their potential worth. She approved the settlement excluding those claims.