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Bank of America’s Countrywide unit has agreed to pay a record $500 million class action lawsuit settlement with investors who claimed they were misled into buying billions of dollars in mortgage-backed securities that were downgraded to junk after the 2007 subprime collapse.
The Countrywide mortgage settlement is the largest ever reached in a federal class action lawsuit over mortgage-backed securities. The consolidated case was filed in 2010 by MBS purchasers who allege Countrywide subsidiaries made false statements about the quality of the mortgages. Countrywide specialized in providing loans to borrowers with poor credit histories or who could not document their ability to repay a loan.
Investors sought damages for $351 billion in downgraded mortgage debt that they say Countrywide misled them into purchasing between 2005 and 2007. U.S. District Judge Mariana Pfaelzer in Los Angeles significantly reduced the case, however, by ruling investors could only sue over securities they bought, not those with similar qualities. She narrowed it to $2.6 billion in bonds and dropped Bank of America as a defendant.
The settlement will resolve claims on about 80 percent of the unpaid principal balance of Countrywide-issued residential mortgage-backed securities, and 70 percent of similar claims against Bank of America overall, the bank said.
An attorney representing some of the plaintiffs estimates that about $15 billion in securities remains in the litigation.
Judge Pfaelzer will still need to approve the Countrywide mortgage class action settlement. It is separate from an $8.5 billion Bank of America settlement currently being reviewed in a New York state court between BofA and dozens of institutions that invested in Countrywide mortgage-backed securities. Investors’ rights in that class action lawsuit will not be affected by the $500 million settlement, Bank of America said.
The Los Angeles case is Maine State Retirement System v. Countrywide Financial Corp., Case No. 10-cv-00302, U.S. District Court, Central District of California.
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3 thoughts onBofA to Pay $500 Million to Countrywide Mortgage Investors
I purchased a home from Countrywide early 2000 then sold to BOA 2009 during the belly up of banks. I received a small check from countrywide today. How do I find out if I’m a candidate for BOA?
How do I find out if I am eligible for this settlement? I am not getting any information from Bank of America
How do I find out if I am eligible for this settlement? I am not getting any information from Bank of America