A New York state judge granted the request of dozens of investors including pension funds, insurers and several Federal Home Loan Banks to intervene in Bank of America Corp's proposed $8.5 billion settlement with investors who lost money on mortgage-backed securities.

Justice Barbara Kapnick of the State Supreme Court in Manhattan granted the request, which was not opposed by the bank or by Bank of New York Mellon Corp, the trustee that negotiated the accord with 22 investors including BlackRock Inc and Allianz SE's Pimco.

Some investors have objected that the $8.5 billion payout is too low, and that the settlement extinguishes claims they might otherwise have against Bank of America. New York Attorney General Eric Schneiderman also has expressed opposition.

Bank of New York Mellon has contended that the settlement is fair. Bank of America hopes that the accord will address many of its remaining liabilities from its 2008 purchase of mortgage lender Countrywide Financial Corp.

Kapnick has scheduled a November 17 hearing on the settlement.

The case is In re: The Bank of New York Mellon, New York State Supreme Court, New York County, No. 651786/2011.

(Reporting by Jonathan Stempel; editing by Carol Bishopric)