Daily Finance | Bank of America Sued for Countrywide’s Mortgage Sins, Again

Bank of America Sued for Countrywide’s Mortgage Sins, Again


On Monday, a group of institutional investors sued Bank of America, Countrywide, their affiliates, and various former Countrywide executives including former CEO Angelo Mozillo, charging that Countrywide knowingly sold vast quantities of fraudulent mortgages in order to securitize them and sell them to unwitting investors. The plaintiffs, who include New York Life Insurance Company and TIAA/CREF, the teachers’ pension fund, allege violations of federal securities laws and common-law fraud. Bank of America (BAC) has not yet responded DailyFinance‘s request for comment, while the attorney for the plaintiffs had no comment.

The plaintiffs also accuse Countrywide of botching the securitization process by failing to deliver the notes and mortgages into the trusts that issued the securities. The complaint cites the now famous Kemp case, which included testimony by a Countrywide employee that the notes were not delivered or endorsed in compliance with the terms of the contracts. As a result of this allegation, discovery should include documents and depositions aimed at determining how accurate that employee’s statements were. Bank of America, not surprisingly, has been vigorous in its rejection of the employee’s statements.

Interestingly, the plaintiffs aren’t suing the ratings agencies. Although they assert that the AAA ratings the agencies placed on the securities were integral to the investors’ inaccurate assessment of their risk, and that the ratings were inflated by the securities issuers through “ratings shopping,” the plaintiffs have chosen to portray the agencies as fellow dupes of Countrywide. Many other securities fraud cases relating to mortgage-backed securities have included the ratings agencies in the cast of villains… er… defendants. Although the ratings agencies have been successful in getting all the federal securities claims dismissed so far, common-law fraud claims such as those being made in this case have been allowed to go forward.

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2 Responses to “Daily Finance | Bank of America Sued for Countrywide’s Mortgage Sins, Again”
  1. Lit Gant says:

    About time the investors come out of the slime and try to wash themselves off. How long they knew the PSA was violated and they said NOTHING is the question. Why did it take home owners looking into fraud and discovered the violations of the PSAs, and these investors had no one who knew about this fraud? I just do not believe it. However, I am so happy the investors are now going to court. Maybe they will be the death of BOA which needs to die, be disolved, the FDIC to take over and split it up into 10,000 smaller banks. Now, when will the investors go after the fraud in the Bear Stearns Series 1 2007-HE4 trust? And when will someone take on EMC Mortgage and kill it? This company is the source of billions of dollars in fraud. EMC must come to its death.

  2. l vent says:

    The notes were never recorded or secured anywhere. This is most likely because the banksters and wall street’s paper trail would have originated here and they did not want a paper trail of their crimes to be linked through them to whoever originated and backed these Government backed loans and contracts and still do. This should be enough proof of some kind of criminal malice as well as a giant criminal conspiracy and a criminal cover-up of epic proportions. This should either force a recission of our loans or an Indefinite Nationwide Moratorium on all Foreclosures. The fact that this is not even being addressed by our elected Government officials (President Obama and Governor’s of the States) is very suspicious because Fannie/Freddie are a GSE and our Government backs this garbage. The fact that the FBI knew this was happening and alerted our Government about the Ponzi Scheme and that it’s result would no doubt cause a financial crisis causes our Government officials look REALLY BAD. They know the truth about what took place here and are still forcing the banksters to COMMIT ILLEGAL ACTS AGAINST ITS OWN PEOPLE VIA FRAUDCLOSURES OR FAKE DEBT LOAN MODS OR WORSE YET DEED IN LIEU. If our Government does not do something to make this right for the people including those who have already had their homes STOLEN through fraudclosure, No one should VOTE for any of them next time and that will be just a part of our response to the criminals who think they are above the law and are the only ones protected by the Constitution. This is complete FASCISM BY OUR OWN GOVERNMENT.

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