REUTERS: BANK OF AMERICA HIT WITH THREE NEW LAWSUITS FOR "MASSIVE" FRAUD

ONE ON ONE WITH NEIL GARFIELD

COMBO ANALYSIS TITLE AND SECURITIZATION

Bank of America Corp’s

Countrywide mortgage unit is being sued for Fraud!

Investors claiming they were victimized by Bank of America’s Countrywide in a “massive fraud” when they bought mortgage-backed securities.

“Investors now seem to be conforming their allegations to those set forth on my blog 3 years ago — that they were not just sold an empty bag — it was more like they were sold a holographic image of an empty bag. The obvious fraud here extends much further than investors who purchased bogus mortgage backed securities. In order to complete the scheme they were required to lie not only to the investors who supplied the money, but the borrowers as well who were taking it. The common denominator is the use of a third party rating or appraisal upon which everyone hung their hat for “plausible deniability.” Now the deniability is not so plausible. The rating of the bogus securities and the appraisal of the property did not make the securities or property value any more real than it would have been without the made-as -instructed rating or appraisal.

They now seek to again make real what is unreal — the chain of title. This cannot be done without putting ALL TITLE to ALL PROPERTY under a cloud. The substance of the transaction was that investors advanced money to investment bankers and homeowners in the expectation of getting it back along with a return. The terms of that transaction were neither disclosed to the investor, disclosed to the borrower nor described in the promissory note executed by the homeowner. Thus the actual transaction is undocumented and hence unsecured, and the transaction described in the note and mortgage does not exist.

An examination of title immediately following any auction sale corroborates the fact that the investors and the homeowners are kept in the dark through the bitter end, at which point they are both told they have a loss and they must live with it.”

— Neil F Garfield, 1-28-11

REUTERS: 12 companies in New York, including New York Life Insurance Co and Dexia Holdings Inc, filed a lawsuit on Monday, January 23, against Bank of America and Countrywide for fraud (The case is Dexia Holdings Inc et al v. Countrywide Financial Corp et al, New York State Supreme Court, New York County, No. 650185/2011.)  The plaintiffs are claiming that the millions of dollars that they had invested in what they were told was safe and performing investments were actually junk.  To make matters worse, the lawsuit alleges that Countrywide devalued the investment even more by failing to follow its own underwriting rules.

Reuters reports that “According to the complaint, the investors bought hundreds of millions of dollars of Countrywide securities from 2005 to 2007 that they thought were “conservative, low-risk investments.” However, most of the securities now carry “junk” credit ratings rather than the “triple-A” ratings they once had, resulting in “significant losses.”

As a result, the plaintiffs want compensatory and punitive damages. The lawsuit alleges Countrywide “was an enterprise driven by only one purpose – to originate and securitize as many mortgage loans as possible into (mortgage-backed securities) to generate profits for the Countrywide defendants, without regard to the investors that relied on the critical, false information provided to them.”

This claim of fraud is not new to Countrywide.  Countrywide’s Chief Executive Angelo Mozilo’s attorney, David Siegel, said the lawsuit has no basis in law or fact.  Of course, with Countrywide’s recent losses in the courtroom lately, the investors may have a case.  Remember, in October, Mozilo and Countrywide agreed to a $67.5 million settlement of a U.S. Securities and Exchange Commission civil fraud lawsuit accusing him of misleading investors.

Also, the insurer Allstate Corp sued Bank of America last month over the alleged misrepresentation of risks on more than $700 million of mortgage debt it bought from Countrywide.

http://www.reuters.com/article/idUSTRE70O7X820110125?feedType=RSS&feedName=topNews

Coupled with the recent announcement that Bank of America lost $1.6 billion in the 4th quarter of 2010, this has definitely been a bad week for the mortgage giant, and doesn’t look to get any better anytime soon.

Tags: appraisals, Bank of America, countrywide, fraud, ratings
Posted in bubble, Corruption, Eviction, securities fraud |