Countrywide Acquisition Proves to be Achilles Heel of BAC
The acquisition of Countrywide by Bank of America (BAC) in 2008 continues to haunt it with more allegations of fraud. An article from the Advisor Network revealed that over a dozen institutional investors have joined forces in a lawsuit against Bank of America alleging that a “massive fraud” was committed when Countrywide made “reckless and knowingly false” statements about the mortgage backed securities (MBS) they were packaging and selling to investors. Among the institutional investors involved are Dexia Holdings, New York Life Insurance Company, TIAA-CREFF and Mainstay Funds, who maintain that they were looking for conservative, low risk investments when they purchased hundreds of millions of dollars worth of the Countrywide MBS during the period between 2005 and 2007.
As we have reported earlier, testimony procured in a New Jersey foreclosure case revealed that it was “customary for Countrywide to maintain possession of the original note and related documents”, according to a report by Kate Berry for the American Banker. This would mean that Countrywide Financial, which as stated above is now owned by Bank of America (BAC), appears not to have properly transferred necessary mortgage documents when it sold loans to other banks, which then in turn created mortgage backed securities (MBS) from the loans. If the mortgage backed securities turn out not to be “mortgage backed”, then investors who purchased the securities could be able to force Bank of America to buy the securities back. Additionally, if the titles to the homes in foreclosure were improperly created, banks will find it harder to foreclose and selling the properties will be difficult.
If you have suffered losses in MBS, contact our securities law firm for a confidential, no obligation consultation at 1-800-259-9010.