Posted on 10/19/2010 1:03:30 PM PDT by Ernest_at_the_Beach
On Monday, the group wrote to Countrywide Home Loan Servicing and Bank of New York Mellon Corp. /quotes/comstock/13*!bk/quotes/nls/bk (BK 26.11, -0.51, -1.92%) , the trustee of the mortgage securities, saying they haven’t been serving the loans backing the securities properly.
The investors asked Bank of New York to demand the repurchase of loans that were originated “in violation of underwriting guidelines,” according to a statement Monday by Kathy Patrick of law firm Gibbs & Bruns, which is representing the group.
(Excerpt) Read more at marketwatch.com ...
Okay...heaven knows I’m no fan of too-big-to-fail banks, but didn’t the federal government force B of A to take over Countrywide after Bawney Fwank and Chris Dodd had sweetheart mortgage deals from its CEO Mazillo? It’s really cheesy of the NY fed to be part of this lawsuit against B of A/Countrywide now.
The Fed owns securities through its Maiden Lane (i.e. Bear Stearns) portfolio that mean the taxpayers could be hurt IF the suit were successful and the other investors got paid but the Fed didn’t. My guess is that none of it goes anywhere, but it’s gone further than I would have guessed already, so I’m watching.
My recollection is different. B of A's CEO, Ken Lewis, went after Countrywide in the spring of 2008 because it was at a distressed price and he thought the discount to its intrinsic value was big enough to justify going into expansion mode. He did this on his own.
Later, in the fall, he also went willingly into the purchase of Merrill Lynch. However, when M-L started to fail, he wanted to back out as was allowed by contract, but the US Gov't (Fed and Treasury) pressured him to complete the deal. He was given some support, but not enough, and B of A has been hurt.
Now it looks like bad recordkeeping will hit B of A with a double whammy from both Countrywide and M-L mortgages they thought were securitized and gone.
I'm so knowledgeable because I stayed at a Holiday Inn recently, and also because I'm in the middle of reading "The End of Wall Street" by Roger Lowenstein.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.