Mortgage Investors Suing Banks – More Trouble for the Mortgage Industry?
Buyer beware is not just a caution to the average consumers, but should also be caution between company mergers. Bank of America who purchased Countrywide Mortgage back in 2008 to rescue the company believed it was a great opportunity, according to the CEO of Bank of America as cited below:
“Countrywide presents a rare opportunity for Bank of America to add what we believe is the best domestic mortgage platform at an attractive price and to affirm our position as the nation’s premier lender to consumers”
And while it may have been an opportunity, it would appear that some of the loans managed by Countrywide and sold to investors were not up to standards. According to an article in “Daily Real Estate News” February 25th, investors are suing Bank of America claiming that the loans sold to them by Countrywide were misrepresented.
The lawsuit is essentially requesting that Bank of America buy back these loans or pay damages, which could amount to $1.06 billion in securities.
Bank of America in an unrelated issue stated they may have incur an additional $6.1 billion of write-downs and legal costs tied primarily to Countrywide.
The rare opportunity is rarer than anticipated as B of A only paid $2.5 billion for Countrywide and now is faced with losses of three times that figure and possibly more to clean up Countrywide’s shortcomings.
Tagged with: mortgage loans
Filed under: Real Estate
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