Although Bank of America Corp. has apparently moved past two legal actions it had been battling, plaintiffs are still lined up around the block trying to collect on losses from mortgage-backed securities investments.
The Charlotte, N.C.-based company last week reached a $10.3 billion settlement with Fannie Mae on $1.4 trillion in loans. BofA was also one of 10 servicers last week to settle consent order requirements for foreclosure reviews with the Office of the Comptroller of the Currency.
But the string of lawsuits pending against the banking behemoth is nowhere near the end.
In Merrill Lynch Mortgage Investors Trust’s lawsuit against Merrill Lynch Mortgage Lending, investors of $1.1 billion in RMBS issued in 2006 allege that a forensic review of trust loans found more than 2,600 files that suffered from breaches of representations and warranties. The originator on the trust’s 6,000 loans was ResMAE Mortgage Corp., a subprime subsidiary of Credit Suisse that filed bankruptcy in February 2007.
In addition, BofA allegedly had a conflict of interest when it settled a bankruptcy payout as trustee for the securitization during a brief period since becoming parent of Merrill Lynch, according to the complaint filed in New York’s supreme court on Dec. 18. The investors claim that BofA, as successor trustee, didn’t send a notice to investors informing them of the allocation agreement or its terms.
A judge in Los Angeles dismissed claims made by the Federal Deposit Insurance Corp. in its lawsuit against Countrywide Financial Corp. and UBS Securities LLC based on allegations involving owner-occupancy and undisclosed liens on MBS sold to United Western Bank, F.S.B. Also dismissed were all claims against BofA as successor.
The now defunct Office of Thrift Supervision took over Denver-based United Western in January 2011 in a bank failure that was expected to deplete the FDIC’s Deposit Insurance Fund by more than $300 million.
BofA and several subsidiaries were named as a defendant in a lawsuit filed by HSS Nordbank AG on Dec. 14 in New York state court. HSS claims that it suffered losses on $214,144,000 in MBS investments as a result of material misrepresentations made in offering documents about underwriting standards including loan-to-value ratios and owner-occupancy levels. The plaintiff seeks damages in an amount of at least $218,144,000.
A Nov. 13 complaint filed in New York’s supreme court on Nov. 13 by plaintiffs including Phoenix Light SF Limited names BofA and several related firms as defendants. The complaint alleges damages of at least $122,183,462 on RMBS investments of $261,171,000. Offering documents on the Countrywide issuances allegedly contained materially misleading statements and omissions.
Videotaped presentations of current and former BofA executives Barbara Desoer, Ken Lewis and Brian Moynihan were presented this month by MBIA Inc. as proof in its New York lawsuit that the bank’s July 2008 acquisition of Countrywide Financial Corp. was a merger, the Wall Street Journal reported. But BofA reportedly maintains that the acquisition was structured as a purchase of assets, and that it paid a fair value of more than $45 billion to acquire the assets and left adequate cash and viable assets to satisfy creditors’ claims.
