By Karen Freifeld
NEW YORK (Reuters) - The Federal Housing Finance Agency on Friday withdrew its conditional objection to Bank of America Corp's <BAC.N> proposed $8.5 billion settlement with investors in Countrywide mortgage-backed securities.
Other parties, including American International Group Inc <AIG.N>, remain opposed to the deal.
A court filing withdrawing the objection did not give any reasons for the FHFA decision and a spokeswoman for the agency was unavailable for comment.
A hearing is scheduled to begin May 30 in New York state court on whether the settlement should be approved.
The proposed settlement was reached in June 2011 with 22 institutional investors in 530 trusts issued by Countrywide Financial. Countrywide was acquired by Bank of America in 2008.
The FHFA oversees mortgage financiers Fannie Mae and Freddie Mac, which back about half of existing U.S. home loans. The enterprises were seized by the government in 2008 as mortgage losses mounted.
Justice Barbara Kapnick of New York state court in Manhattan set a May 3 deadline for opponents of the settlement to file objections.
The case is In re: Bank of New York Mellon, New York State Supreme Court, New York County No. 651786/2011.
(Reporting By Karen Freifeld; Editing by Theodore d'Afflisio)