Bank of America is being sued by investors who want the bank to buy back mortgage loans or pay damages, accusing Countrywide--which Bank of America now owns--of making several misrepresentations about its mortgage loans.
The lawsuit is among the first by investors seeking to force a major bank to buy back loans packaged into securities, Reuters News reports. The lawsuit was filed in the New York supreme court in Manhattan.
Eleven companies say they are suing on behalf of a trust that owned 6,531 loans, in which they hold more than 25 percent of the certificate balances, according to the complaint filed in court.
The companies accuse Countrywide of making false representations on about 1,432, or nearly 66 percent, of the 2,166 mortgage loans they investigated, Reuters News reports.
This complaint is completely meritless and suffers from numerous procedural and substantive defects, Bank of America spokesman Jerry Dubrowski told Reuters News. This appears to be a group of sophisticated investors looking to blame someone for investment losses incurred during a period of economic downturn.”
In recent months, Bank of America has faced several lawsuits tied to Countrywide, once the nation’s largest lender.
Source: “Investors Sue BofA, Seek Countrywide Loan Buyback,” Reuters News (Feb. 23, 2011)