Finally we see some legal action on the Countywide mortgage scandal as Bank of American (now owner of Countrywide) faces law suites over questionable ratings of the mortgage backed securities Countrywide sold during the last few years before the mortgage meltdown.
Lets hope that someone is finally held accountable for part of this mess and is made to admit that greed and corruption were the underlying causes of the current mortgage mess we are in.
Bank of America sued by mortgage investors for “massive fraud”
Bank of America’s Countrywide mortgage operation was accused of “massive fraud” in a suit by big investors who say they were misled about the quality of mortgage-backed securities.
A dozen institutional investors, including TIAA-CREF Life Insurance Co. and New York Life Insurance Co., filed the complaint Jan. 24 in New York state Supreme Court, according to Bloomberg News.
The litigation is the latest salvo in a battle between BofA, the largest bank doing business in the Wichita area, and institutional investors over mortgage-backed securities and the quality of the loans backing those investments.
“We will review the suit, but on first glance these sound like large, sophisticated investors who now want to blame someone for the fact that the declining economy caused their investment to lose value,” said BofA (NYSE: BAC) spokeswoman Shirley Norton.
In the suit, the investors say they purchased Countryside’s mortgage-backed securities, seeking a low-risk investment. But the plaintiffs allege that Countrywide’s documentation on the mortgage-backed securities was knowingly false. BofA acquired Countrywide in 2008.
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“Countrywide was an enterprise driven by only one purpose — to originate and securitize as many mortgage loans as possible into MBS to generate profits for the Countrywide defendants without regard to the investors that relied on the critical, false information provided to them with respect to the related certificates,” according to the suit.