Investors Charge BofA/Countrywide With 'Massive Fraud'
There are more mortgage-related headaches today for Bank of America. A dozen large investors have filed a lawsuit against the bank alleging massive fraud stemming from mortgages issued by Countrywide. The plaintiffs in the lawsuit - New York Life, TIAA-CREF and ten other institutional investors - have long reputations as safe places for people to entrust their nest eggs and life insurance policies. They claim they were looking for conservative investments for their customers when they were lured by Countrywide into buying hundreds of millions of dollars of high risk securities. The lawsuit alleges Countrywide and its subsidiaries greedily made home loans to people who couldn't possibly make the payments, and then lied about how risky the loans were when selling them off as investments to companies like New York Life. These mortgage-backed securities, as they're called, were sold between 2005 and 2007. Then the housing market crashed, and foreclosures mounted, along with losses for the investors. A spokeswoman for Bank of America - which now owns Countrywide - told the Associated Press the lawsuit sounds like "large, sophisticated investors who now want to blame someone for the fact that the economy caused their investment to lose value." The question of who's at fault for the housing crash is one the courts are being asked to decide. This is just the latest lawsuit to place some of that blame on Bank of America.