Investors Sue BofA, Citing Misrepresentations
Bank of America is being sued by investors who want the bank to buy back mortgage loans or pay damages, accusing Countrywide–which Bank of America now owns–of making several misrepresentations about its mortgage loans.
The lawsuit is among the first by investors seeking to force a major bank to buy back loans packaged into securities, Reuters News reports. The lawsuit was filed in the New York supreme court in Manhattan.
Eleven companies say they are suing on behalf of a trust that owned 6,531 loans, in which they hold more than 25 percent of the certificate balances, according to the complaint filed in court.
The companies accuse Countrywide of making false representations on about 1,432, or nearly 66 percent, of the 2,166 mortgage loans they investigated, Reuters News reports.
“This complaint is completely meritless and suffers from numerous procedural and substantive defects,” Bank of America spokesman Jerry Dubrowski told Reuters News. “This appears to be a group of sophisticated investors looking to blame someone for investment losses incurred during a period of economic downturn.”
In recent months, Bank of America has faced several lawsuits tied to Countrywide, once the nation’s largest lender.
Source: “Investors Sue BofA, Seek Countrywide Loan Buyback,” Reuters News (Feb. 23, 2011)
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BofA Is Exiting Wholesale Mortgages
Bank of America Corp. is quitting the wholesale mortgage business. It will continue to offer mortgage loans directly to consumers, and continue to buy loans originated by community banks, credit unions and other lenders.
“By exiting the first mortgage wholesale channel, we can redirect critical operational resources to further enhance our capabilities in direct-to-consumer channels,” said Barbara Desoer, president of Bank of America Home Loans, in a statement.
According to Mortgage Finance, during the first six months of the year, the share of Bank of America mortgages originated by brokers was only 4 percent. Competitor Wells Fargo & Co. says it will continue to work with brokers.
Source: Charlotte Observer, Rick Rothacker (10/06/2010)
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Bank of America Urges Funding for Investors
Analysts from Bank of America have proposed that instead of further funding TARP to help distressed home owners hold onto their properties that the money go to property management companies, which would turn the properties into rentals.
In a recent research paper, Bank of America analysts suggested that the government spend as much as $400 billion to encourage property management companies to buy properties and rent them out, bringing the homeownership level to “a more natural level of 62 percent to 64 percent” from its current 67 percent. The investors would be prevented from reselling the properties quickly.
Source: The Wall Street Journal, Emily Peck (09/27/2010)
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Mortgage Modification Plan Falls Short
Only 65,000 people – about 7 percent of those who applied – have successfully navigated President Obama’s plan to help borrowers who are in trouble, the Treasury Department said last week.
About 49,000, or 5 percent, have dropped out of the program because they don’t qualify. Most of the remainder are still waiting.
Bank of America, the largest company in the program, has completed fewer than 2 percent of the modifications for 200,000 borrowers who signed up. The most successful lenders include Ocwen Financial Corp. and Carrington Mortgage Services, which have modified loans for 40 percent of their enrolled borrowers.
Source: Associated Press, Alan Zibel (01/15/2010)
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BoA Struggles With Loan Modifications
Bank of America could collect about $6 billion if it meets the deadline set by the federal government to help struggling borrowers for the Making Home Affordable program.
But the Treasury Department released a report last week that showed that only 11 percent, about 95,000, of Bank of America’s delinquent borrowers who are potentially eligible for the program have been given a loan modification. That puts Bank of America at the bottom of the list of major banks involved in the program.
“We’re sure working hard,” said Ken Scheller, senior vice president for home retention at Bank of America, when asked about his company’s low success rate. “We don’t want to be down there.”
There appear to be multiple problems, not the least of which is that many of the employees handling the modifications are completely new to the business. Angry investors complicate the issue, with 15 percent of them demanding that the bank get their approval for every single case.
Source: Washington Post, Renae Merle
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Shorting Bank of America
We all know a short sale is when a homeowner and the bank that holds their note agree to sell for a price that’s less than the amount of that note. It’s sort of a win win, in that the seller walks away without having to fund the deficiency, and the bank doesn’t have to [...]