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Bank of America faces lawsuit from US Bancorp over Countrywide mortgages from 2005
NEW YORK (AP) ' The lawsuits against Bank of America are piling up.
The latest comes from U.S. Bancorp, which wants Bank of America Corp. to repurchase poorly-written mortgages sold by Countrywide Financial in 2005.
Bank of America bought Countrywide Financial Corp. in 2008.
The lawsuit, which was filed in New York on Monday, claims Countrywide sold U.S. Bancorp a pool of over 4,000 loans originally valued at $1.75 billion. U.S. Bancorp claims Countrywide ignored its own mortgage underwriting guidelines when issuing those loans.
According to the complaint, Countrywide agreed to repurchase loans within 90 days if any of the statements made in the loan contract wound up being untrue. Those statements included an assertion that the loans complied with the bank's underwriting guidelines.
U.S. Bancorp says Countrywide's loans began to "become delinquent and default at a startling rate," soon after it sold the loans. U.S. Bancorp has asked the court to ask Countrywide to repurchase either just the defective loans or all of the loans in the pool.
A U.S. Bancorp spokesman, Thomas Joyce, said the bank filed the lawsuit as a trustee on behalf of several investors who bought the loans. He wouldn't identify the number of investors the bank represents. "Because the matter is in litigation, I can't comment on the specifics in the lawsuit," he said. Bank of America didn't comment.
The nation's largest bank is facing several other lawsuits. On Aug. 8, American International Group Inc. sued the bank for more than $10 billion, claiming Bank of America deceived the insurer by selling it faulty mortgage investments. Bank of America has already paid a total of $12.7 billion this year to settle similar claims.
Worries that similar lawsuits would further drain the bank's cash reserves led to a sell-off in the bank's shares by 36 percent this month to a low of $6.01.
The stock price rose back after the Charlotte, N.C. bank got a $5 billion investment from Warren Buffett's Berkshire Hathaway Inc. last week.
Bank of America's stock fell 26 cents, or 3 percent, to $8.13 at 2 p.m.