Posted on Thursday, March 17, 2011
More legal woes have developed for Bank of America, as some of its mortgage investors brought a lawsuit against the lender in an attempt to force the bank to buy back bad loans.
According to Bloomberg, the original balance of securitized loans involved in the case was $2.8 billion, and the plaintiffs claim their trustee “unreasonably failed” to sue BofA.
Bloomberg also reported that the plaintiffs claimed at least 1,190 mortgage loans in the trust did not meet the
standards of the underwriting guidelines and that at least 413 had loan-to-value ratios of more than 95 percent.
Another group of investors has nearly doubled the amount of loans it says it wants the company to repurchase.
Bank of America said on Friday that a group of investors including Pacific Investment Managemnet Co. (PIMCO), BlackRock, Inc., and the Federal Reserve Bank of New York said they want the bank to buy back 225 securitizations. In October the same group said they wanted the bank to repurchase 115 loans.
The group says BofA sold them loans that were not up to the company’s underwriting standards, and failed to maintain prudent mortgage servicing standards.
The PIMCO group is said to be leaning toward a settlement with the bank, rather than pursue a lawsuit, prompting many to wonder if repurchase settlements will become a trend for the bank.
Bank of America announced in January that it paid a nearly $3 billion settlement to Fannie Mae and Freddie Mac on the last day of 2010 to cover repurchase claims from the two GSEs.
By: Joy Leopold, DSNEWS