Countrywide Financial, a unit of Bank of America Inc, has been accused of “massive fraud” in a lawsuit, according to an article by Karen Freifeld on Bloomberg.com. The lawsuit alleges that investors were misled about mortgage-backed securities. The investors claim that they wanted “conservative, low-risk investments” and bought “hundreds of millions of dollars of Countrywide mortgage-backed securities from 2005 to 2007” that were anything but low-risk. Among the institutional investors who filed the complaint are TIAA-CREF Life Insurance Co., New York Life Insurance Co., and Dexia Holdings Inc.
According to the complaint, “Countrywide was an enterprise driven by only one purpose, to originate and securitize as many mortgage loans as possible into MBS to generate profits for the Countrywide defendants without regard to the investors that relied on the critical, false information provided to them with respect to the related certificates.” The suit also cites other fraud relating to misstatements about the company’s mortgage-loan underwriting standards.
A spokesman for Bank of America, Shirley Norton claims that at “first glance this sounds like a large, sophisticated investor who now wants to blame someone for the fact that the declining economy caused its investment to lose value.”
Listed in the complaint are more than 20 defendants including CEO Angelo Mozilo, who in October, agreed to pay $67.5 millions to the SEC to settle allegations that he misled investors. The SEC also sued Chief Financial Officer Eric Sieracki and Chief Operating Officer David Sambol in June 2009, saying, “They publicly reassured investors about the quality of Countrywide’s loans” while at the same times knowing that growth was being fueled by “letting underwriting guidelines deteriorate and originating an increasing number of risky subprime loans.”
Page Perry is an Atlanta-based law firm with over 125 years collective experience representing investors in mortgage securities-related litigation and arbitration. While past results are not indicative of future success, Page Perry’s attorneys have recovered over $1,000,000 for clients on more than 40 occasions. Page Perry’s attorneys are actively involved in counseling institutional and individual investors regarding their mortgage securities problems. For further information, please contact us.