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Investors sue Countrywide for widespread fraud
by Joseph Ernest January 26, 2011
Newscast Media NEW YORK --Countrywide, which is Bank of America Corp's 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.
Investors claim that Countrywide misrepresented the securities' safety in offering documents and elsewhere, and compromised their investments by ignoring its underwriting guidelines. The complain said that as a result of Countrywide's fraud, most of the securities now carry "junk" credit ratings rather than the "triple-A" ratings they once had, resulting in "significant losses."
Plaintiffs want compensatory and punitive damages in the case Dexia Holdings Inc et al v. Countrywide Financial Corp et al, New York State Supreme Court, New York County, No. 650185/2011.
Shirley Norton, a Bank of America spokeswoman 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."
Other defendants include several former Countrywide officials, including longtime Chief Executive Angelo Mozilo who agreed in October 2010 to a $67.5 million settlement of a U.S. Securities and Exchange Commission civil fraud lawsuit accusing him of misleading investors. Before being bought by Bank of America, Countrywide had been the largest U.S. mortgage lender. Add Comments>>
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