Officials of state and city pension funds announced Friday that Countrywide Financial Corp. had agreed to a $624 million settlement of fraud allegations against it. The deal covers claims that the mortgage giant made misstatements about its lending practices, artificially inflating the price of its securities ahead of the national housing collapse in 2007 and exposing investors to excessive undisclosed risk.
The state and city pension funds served as lead plaintiffs in the class action filed on behalf of shareholders. They stand to recover up to $15 million in losses. A spokeswoman for the Bank of America, which took over Countrywide in 2008, confirmed the proposed settlement but said the company denies any wrongdoing. Countrywide would separately pay the plaintiffs $600 million and its accounting firm, KPMG, would pay $24 million.
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