(Reuters) - Bank of America Corp has reached a record $500 million settlement with investors who claimed they were misled by its Countrywide unit into buying risky mortgage securities.
The settlement requires the court approval, and is the largest accord to date resolving a federal securities class-action case over mortgage-backed securities, lawyers for the plaintiffs said on Wednesday.
Investors had accused Countrywide and other defendants of misrepresenting the risks of securities they sold between January 2005 and November 2007.
Countrywide was at the time the largest U.S. mortgage lender, and specialized in loans to people with weaker credit histories or who could not fully document their ability to pay.
Bank of America bought Countrywide in July 2008. Lawrence Grayson, a Bank of America spokesman, declined to comment.
Settlement papers are expected to be made public by the end of May, according to Steven Toll, a lawyer for some plaintiffs.
The case is one of many in which investors have sought to hold banks responsible for allegedly misleading them about the quality of mortgage securities.
Last May, Bank of America won court approval for a $315 million settlement of a similar lawsuit against its Merrill Lynch unit. Wells Fargo & Co has reached a separate $125 million settlement.
The Countrywide settlement resolves three lawsuits and requires approval by U.S. District Judge Mariana Pfaelzer in Los Angeles.
(Reporting by Jonathan Stempel in New York; Additional reporting by Avik Das in Bangalore; Editing by Saumyadeb Chakrabarty, Martha Graybow and Maureen Bavdek)