By Karen Freifeld
NEW YORK (Reuters) - Investors that oppose an $8.5 billion settlement with Bank of America Corp
"You can have access to any settlement discussions where the trustee was present," Kathy Patrick, an attorney for investors who support the deal, told counsel for the opponents of the settlement at a court hearing on Tuesday.
The proposed settlement would resolve claims lodged by investors in mortgage bonds issued by Countrywide Financial Corp. Countrywide was purchased by Bank of America in 2008.
Twenty two institutions, including BlackRock Inc
American International Group Inc
At a court hearing on Tuesday, Patrick, the attorney from Gibbs & Bruns who helped negotiate the settlement, said the opponents of the settlement could have access to records of negotiations between her team and Bank of America at which the trustee, Bank of New York Mellon, was also present.
Dan Reilly of Reilly Pozner, who represents objectors, said in an interview after the hearing that the offer was a step forward. "I think we're making progress in getting more light shone on this agreement," he said.
BNY Mellon has said that settlement negotiations are not relevant. However, at Tuesday's hearing, Matthew Ingber of Mayer Brown, who represents BNY Mellon, said communications between BNY Mellon and Bank of America also would be produced.
Communications between Patrick, of Gibbs & Bruns, and Bank of New York Mellon or Patrick and Bank of America alone will not be produced by the investor group or trustee.
The objectors also have been seeking access to thousands of loan files underlying the bonds. But New York state Supreme Court Justice Barbara Kapnick, who must decide whether to approve the settlement, suggested starting with a review of somewhere between 150 and 500 loan files.
"If you looked at all these loan files, that would take many, many years and this whole settlement would fall apart," Kapnick said.
BNY Mellon has said it decided the settlement was in the best interest of the trusts. It said it believes the judge's approval should be based on whether the trustee's decision was within its reasonable discretion.
The case is In the application of the Bank of New York Mellon, New York state Supreme Court, No. 651786/2011.
(Reporting by Karen Freifeld; Editing by Steve Orlofsky)