BofA's Countrywide sued, accused of massive fraud

[sabrina 1]

Source: Reuters

(Reuters) - Bank of America Corp's Countrywide mortgage unit has been sued by investors claiming they were victimized in a "massive fraud" when they bought mortgage-backed securities.

The lawsuit was filed on Monday in a New York state court by 12 plaintiffs including the TIAA-CREF fund family, New York Life Insurance Co and Dexia Holdings Inc.

According to the complaint, the investors bought hundreds of millions of dollars of Countrywide securities from 2005 to 2007 that they thought were "conservative, low-risk investments."

The investors said Countrywide misrepresented the securities' safety in offering documents and elsewhere, and compromised their investments by ignoring its underwriting guidelines.



Read more: http://www.reuters.com/article/idUSTRE70O7X820110125?feedType=RSS&feedName=topNews

[Sinistrous]

1. Wow ! Talk about a clash of the Titans.

This could get interesting.

[mike_c]

2. GAWD please let Wikileaks be the last nail in the coffin of BofA....

Couldn't happen to a nicer bunch of banksters.

[slackmaster]

5. Countrywide was acquired by BofA in the summer of 2009

Just to set the record straight, Countrywide was still an independent firm chaired by Angelo Mozilo and his cronies when the transactions in question occurred.

I hate BofA too, for plenty of reasons both personal and professional.

[TheMadMonk]

14. Due dilligence leaves BoA holding the bag. They bought the grief...

...with the company.

[slackmaster]

17. Absolutely true.

I've seen a lot of botched due diligence in the 27+ years I've been involved in the financial services industry.

[quakerboy]

29. Hopefully it will end up being a lesson to everyone currently suffering merger fever

If all the bad choices a corp makes started coming home to roost, there might be a little less eagerness to consolidate companies so often.

[Warpy]

8. Let this be what sends the crooks to prison, in any case

Fraud at Countrywide existed at all levels, from the kids in suits giving mortgages they knew people couldn't possibly afford to pay off after encouraging them to lie to get them to the pigs at the top slicing and dicing the trash mortgages and repackaging them as investments.

If B of A wants to continue to exist, they're going to have to cooperate fully to expose all these bumbags at every level, making sure they are prosecuted.

So far, that hasn't happened and they're just adding fraud to fraud as they convert mortgage mills into foreclosure mills, probably with the same damned crooks running the stores.

[sabrina 1]

25. I keep checking for that leak, but so far we are still waiting.

I would take Goldman Sachs also, if it isn't BOA that is. Either one would be fine imo.

[DissedByBush]

26. Wanna take bets on the judge

excluding any and all evidence obtained via WikiLeaks?

[slackmaster]

3. Their loan origination process baffled me when I decided to refinance in 2003

I was in about year 5 of a 30-year fixed (6.825%) mortgage with Countrywide on my home, which I had refinanced when I got divorced.

I had a strong equity position, a perfect payment record, good credit scores, and good income. The going rate on 15-year loans had dropped below 5%, so it was a no-brainer to refinance with a shorter term.

I sent in several applications including one to Countrywide, thinking that it would be a good idea to give them a chance to keep my business.

The rate they quoted me was way out of line, significantly higher than all the others. I ended up at 4.75% with another lender, and payed only $800 in total fees and closing costs. It was the best deal I've ever made in my life so far.

As is often the case with new loans, mine was sold in less than a month. To Countrywide. They wanted to own my note and were willing to carry the liability of servicing it, but they didn't want anything to do with originating the loan.

:crazy:

[sabrina 1]

9. So, they wouldn't deal with you directly according to

going rates, but bought it after you made a better deal somewhere else?

I don't know much about economics, so if there is some logic in that I cannot see it. Was there any? Or was it just plain incompetence?

[slackmaster]

13. The only explanation that kind of makes sense is they just didn't like doing originations

But that's inconsistent with their track record of originating a disproportionate number of sub-prime loans that ended up going into default.

I guess they figured I was too savvy to be worth trying to gouge for loan fees; that I was credit-worthy enough to have better choices than they were willing to offer. They high-balled my rate knowing that I'd just go away.

[sabrina 1]

23. Sounds like your last sentence is the most likely explanation.

A lot of people do not know much about mortgages when they buy their first homes. Sounds like these people preferred to prey on the most vulnerable and gullible.

[No Elephants]

41. Sometimes, the person(s) who refuse just are not thinking, esp. when they're arrogant.

I know a co-op in Brooklyn with a perfect payment record that asked to re-fi a $1.9 million loan at a lower rate. Lender refused, so they looked elsewhere.

When the lender realized they were going elsewhere, not simply renewing, the lender offered a lower rate, but it was too late.

And, mortgages usually get sold in bulk, not one at a time. Reading anything personal into it, one way or another, is a mistake.

[Sonoman]

4. And all those folks lost their homes.

But these guys will get their money.

I hope this destroys BofA. We closed all of our acc'ts there and moved then to a bank that serves only Sonoma Valley.

Sonoman

[slackmaster]

7. Probably only a fraction of them did, and that is not really the issue

The securities were mis-represented as being of high quality, which they weren't.

As much as I despise BofA, this one is really not their fault. They got stuck holding the bag.

[Sonoman]

10. Everything is Bof A's fault.

Everything.

But, seriously, BofA deserves everything that happens to it.

It's like when that judge in Houston nailed me to the wall on a pot deal and said, "This is for all the times you got away with it, Sonoman".

I couldn't really argue the point.

Sonoman

[sabrina 1]

19. Lol! n/t

[mike_c]

11. well, to be fair, I suspect they engaged in identical behavior themselves...

...and my impression is that the banksters have been pretty happy to pass the bag around, hoping to wring some more profit from it. BofA might not have been directly responsible for the securities that led to this particular fraud case, but I'm pretty confident it's only a matter of time before they get caught with shit all over their hands books too, and in any event, if they were willing to take whatever profit was still available from Countrywide, they bought the liabilities, too.

[girl gone mad]

12. These problems were well known when they bought Countrywide.

Bank of America knew what they were getting.

http://money.cnn.com/2008/01/11/news/companies/tully_countrywide.fortune/index.htm

[slackmaster]

15. I don't doubt it, but they do have some room for plausible denyability

The fact that they're holding me liable for a credit card my ex-wife opened when we were married, that I never knew about until years later, and now carries a balance consisting only of money borrowed after our divorce, is sufficient reason for me to hate their guts.

[No Elephants]

43. No, they do not have any room for plausible deniability. None. Less than none.

I frickin' googled Countrywide about five or six years ago, when a friend got a job offer. After five minutes, I told him to steer clear for the sake of his own reputation, even though they were then making money hand over fist.

Are you seriously suggesting a giant in the same industry, with big law and accounting firm helping it do due diligence, knew less than a lay person who spent five minutes online?

[TheMadMonk]

20. Two words:- Due dilligence. Two more:- Their responsibility.

If this gets really nasty, BoA's investors will be wanting them to explain their DD failure.

[No Elephants]

42. Countrywide's reputation was lousy and widespread years before B of A bought it.

B of A knew exactly what it was buying before it bought.

[DCKit]

6. I would like to see the pension funds and those who represent individual investors...

at the front of the line in these suits.

Those who offered and those who took bribes to invest in these skeezy funds need to be imprisoned and their assets seized.

Those named in the above OP should have known better. If not, they could have read DU to learn about their own business and how risky these investments actually were.

[sabrina 1]

21. Yes, it was the worst idea in the world to invest people's hard

earned money in these institutions, especially after Enron.

I haven't read the complain to see who the plaintiffs are yet. Will go try to do that in a few minutes. But I agree with you, that is who should be represented at the front of the line.

[GiveMeFreedom]

16. All I have to say is,

GOOD! Fuck Bank of America

I hope they go down in a too hot to fail flame.

[slackmaster]

18. Yeah, I say that too

They're assholes.

[sabrina 1]

22. If they are the bank in the Wikileaks papers, then you will probably

get your wish. Btw, where is that leak? It's January already. Someone tell Julian!

[sarcasmo]

24. Kick to the top, even screwing the investors.

[DeSwiss]

27. BOA still has no shame.....

...nor a sense of self-awareness.

Bank of America spokeswoman Shirley Norton said in a statement that the lender would review the lawsuit, "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."

You ever notice how that when its bad news that these criminal-ass companies are forced to face up to, they always seem to have a "spokeswoman" as the one delivering the bad tidings? There's no glass ceilings when it comes to giving a woman the dirty work of being the face of ones immoral shenanigans, now is there?

But these bastards at BoFA really take the cake. That circular argument they're trotting out here reminds me of the one I tried as a 7-year old.

- It was something along the lines about how cookies shouldn't have been left out where I couldn't help but take a few....

K&R

[AnnieBW]

28. When do they sue Wells Fargo?

Considering how they treated me and my husband when we came close to foreclosure, I'd volunteer to be a witness. Heck, I'd pay my own way to testify.

[sabrina 1]

36. I'm with you on that. My friend lost her home

through foreclosure to Wells Fargo last year. Her husband had died of cancer and she fell behind in her mortgage payments but wrote and asked them for a mortgage adjustment. They never responded to a single letter or call and sent back her checks when she tried to pay a partial payment hoping to meet with them and get a temporary adjustment.

She finally got a lawyer, but they would not respond to him either, initially. While all this was going on we found out that her mortgage had been transferred four times in 9 years and twice it was recorded by MERS.

The attorney for Wells Fargo was a guy named Steve Bauer. He was running a law mill, refusing to communicate with anyone.

To make a long story shorter, she lost her home (so much for support for the troops, her husband was a veteran). But right after that, I read that there is now a Rico Suit, class action, being filed against the attorney and others in his office.

We knew all along there was something wrong about the way Wells Fargo dealt with her situation. And they refused to provide the paperwork, the 'note' when she requested it. She could have afforded to stay with a small readjustment to her mortgage, but to them, she was not even a human being.

I am hoping that the Rico Suit will result in criminal charges against the law mill. I believe she was foreclosed on illegally, as well many others he was throwing out of their homes, several per week.

So, I know what you mean about Wells Fargo. Btw, there was a ruling against them in Mass a few weeks ago, airc. It was a very big thing and could affect them in other attempts to foreclose on people. So, slowly but surely justice may be served ~

[DirkGently]

30. Watch for the Financial Institution Super Awesome Patrotic Immunity Act of 2011.

[suffragette]

31. This is also about retirement

being decimated on all fronts.

TIAA-CREF stands for Teachers Insurance and Annuity Association (TIAA) and College Retirement Equities Fund (CREF).

That's a whole lot of people in education who have already been getting hammered getting hit again.

[sabrina 1]

34. Thank you, I wondered if those whose pensions were

affected would be part of the suit.

Thanks for that very important piece of information ~

[suffragette]

37. I guess they would be through Tiaa-Cref

being involved (they've certainly been having to take those losses). Though not as direct plaintiffs.

[KoKo]

32. K& Recommend...although like the Banksters...this will Never Go Anywhere.

Like the BANKSTER's FRAUD against the American People.

It sounds good...but won't go anywhere. Thanks for posting this, though. Seriously.

[sabrina 1]

35. It's something, at least it's bad press for them ~ but

I'm not giving up hope. What Congress won't do, wouldn't do, hold some of these people accountable, HAS been happening in a few courtrooms around the country.

What I'm worried about is that Congress with WH approval, will pass laws capping how much can be paid out in these lawsuits. They are always looking for ways to protect the people they work for!

[Citizen Worker]

33. Will the plaintiffs suspend their advocacy for tort reform pending resolution of their lawsuit? Of

course, once the suit is either settled or adjudicated no doubt they will resume their quest for tort reform.

[MilesColtrane]

38. Any company stupid enough to buy Countrywide as it was circling the drain deserves...

everything it has coming.

Suck it, BOA!

[sabrina 1]

39. Didn't they get a bailout? Maybe it was a condition of the bailout?

I'm sure they didn't do it just to be nice.

[MilesColtrane]

40. Ken Lewis claimed that the Fed leaned on BOA to buy out Merill Lynch.

Bernanke denied this when he testified before a House committee investigating the financial meltdown.

But, the Countrywide acquisition was a matter of simple brainless greed on Lay's part.

He rolled the dice on making BOA the nation’s biggest mortgage lender and loan servicer by sweeping up Countrywide at a "bargain" price.

BOA stockholders reacted by removing him as Chair of the Board of directors. He "retired" as CEO and president not too long after that.

[sabrina 1]

45. Thanks for the info. Sounds plausible. Greed knows no bounds

I just want to know when the prosecutions begin. So far, all I see are rewards going to these corrupt gamblers on Wall St.

[No Elephants]

44. A condition of the bailout? We put conditions on the bailout?

[sabrina 1]

46. No, no conditions that would benefit the people of course.

But I was thinking more of their little, exclusive club that came up with these schemes trying to hide their crimes. I don't have the kind of criminal mind these people have to try to figure out what they might have gained by keeping Countrywide afloat by having Bank of America take it over, but there must have been something to make it worth while. Like maybe keeping it afloat so that the extent of the corruption would not be exposed should it collapse.

These people have twisted minds. For decent people it's hard to figure out why they do what they do. But I'm sure they will not do anything that doesn't benefit them.