By Karen Freifeld NEW YORK (Reuters) - A decision on whether to approve Bank of America Corp's proposed $8.5 billion settlement with investors in mortgage securities is now in the hands of a New York state judge, after a nine-week court proceeding ended on Thursday. Justice Barbara Kapnick, of New York state Supreme Court in Manhattan, must decide whether it was reasonable for Bank of New York Mellon Corp, as trustee for the securities, to enter into the settlement, which is binding on investors. The judge gave no indication when she might rule. Decisions in New York state courts can take weeks or even months. Bank of America agreed to the deal in June 2011 to resolve claims over toxic mortgage-backed securities issued by Countrywide Financial, which Bank of America bought in 2008. A group of 22 institutional investors, including BlackRock Inc, Metlife Inc, and Allianz SE's Pacific Investment Management Co (Pimco) took part in the negotiations. Objectors to the settlement have been led by American International Group Inc (AIG), which has argued the process was flawed and that there is no proof the settlement adequately compensates bondholders. New York attorney Hector Gonzalez, of Dechert, who represents Bank of New York Mellon, got in the last word on Thursday. "The settlement looks even better for the trusts today than it did in June 2011," Gonzalez said, given the housing recovery and court rulings that make it likely that Bank of America would not be held responsible for Countrywide's liabilities. He told the judge the decision to approve the settlement should be "an easy call," as it was for the trustee, despite efforts by the objectors to complicate the case. Earlier Thursday, New York attorney Beth Kaswan, of Scott+Scott, who represents the Chicago police pension fund, urged the judge to reject the deal. Kaswan is among opponents who say the settlement would resolve claims for up to $100 billion in losses, offering only pennies on the dollar. "This settlement is not fair and reasonable," Kaswan said in her closing. "BNY Mellon left billions of dollars on the negotiating table." During the proceeding, the objectors raised conflict of interest issues, claimed the investor group excluded some bondholders, and criticized the trustee for not reviewing loan files to identify defective loans. Proponents say the objectors represent fewer than seven percent of investors in the 530 trusts covered by the deal, and that the trustee speaks for all certificate holders. The number of opponents also has fallen since the case began. The Federal Home Loan Banks of Boston, Chicago and Indianapolis, who withdrew their opposition on November 1, were among the latest opponents to drop out. The attorneys-general of New York and Delaware, who intervened in the case two years ago, said in May they would not block the accord. Kathy Patrick, a lawyer representing the group of 22 investors, told the judge on Thursday that the trustee achieved "a superb result" for investors. She said that rather than settle, the dissident objectors want to put the claims on "a far riskier and uncertain course." "There is, in short, no evidence on which this court can or should displace the trustee's reasonable judgment," said Patrick, of the Houston law firm Gibbs & Bruns. Patrick called it a "fiction" that her group excluded investors, and said that AIG declined to participate. The supporters contend there are about $53 billion in losses to date, and account for 90 percent of lifetime losses. They say reviewing loan files would have only brought uncertainty and disputes. An expert hired by the trustee evaluated projected losses using data from 100,000 loans. The judge thanked the attorneys and commented on the tensions before adjourning on Thursday. "It was a difficult long trial," Kapnick said, with "heated moments, which you would expect in a case of this magnitude." JPMorgan Chase & Co on Friday entered into a $4.5 billion settlement with a similar group of investors to resolve misrepresentations in mortgage securities issued by JPMorgan and Bear Stearns, which it acquired in 2008. Unlike the Bank of America deal, the trustees overseeing the securities were not involved in negotiations. They were given 60 days to evaluate the deal, which may require court approval as well. 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 Ken Wills)