A lawsuit was filed last month against Bank of America Corp. and its Countrywide Financial unit alleging fraud in the sale of residential mortgage debt to a New York mutual life insurance company. National Integrity Life Insurance Co., which mainly sells annuity products, is seeking at least $93.8 million after investing in certificates issued through 24 securitizations that it had believed were safe, and which mostly carried ”triple-A” credit ratings.
The company contended that most of its certificates are now “junk,” after Countrywide abandoned its underwriting guidelines, failed to properly assign many mortgages underlying the certificates, and failed to properly transfer notes and loan files to the relevant trusts. The lawsuit, filed in the U.S. District Court in Manhattan, seeks to force Bank of America to buy back the certificates. It also seeks punitive damages and triple damages.
The Charlotte, N.C.-based lender faces many lawsuits over its disastrous 2008 acquisition of Countrywide, once the largest U.S. mortgage lender. Analysts now estimate that the $2.5 billion purchase has cost Bank of America more than $30 billion, including legal costs and writedowns.
Source: Insurance Journal
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