December 3rd, 2008 12:02 PM by Lehel Szucs
No wonder foreclosures continue - ultimiatley it is up to the investors to accept the losses, not the banks that service the loans. The outcome of the below will be very interesting.
Hedge fund Greenwich sues Countrywide over mortgage accord
Greenwich Financial alleges the deal to cut mortgage payments will hurt investors.
December 2, 2008
Countrywide Financial Corp., the lender bought by Bank of America Corp., was sued by Greenwich Financial Services Fund over claims that an agreement to reduce payments on mortgages by $8.4 billion would hurt investors.The hedge fund said investors would be harmed by the bank's settlement, reached on behalf of Countrywide, with 15 state attorneys general. The value of trusts that bought 400,000 mortgages will decline under the deal, the fund said.
In the proposed class-action lawsuit, the Greenwich, Conn.-based fund demands a declaration that "Countrywide must purchase at par every mortgage loan that it sold to any of the 374 securitization trusts," David Grais, a lawyer for the fund, said Monday in a statement. Grais said Countrywide could owe the trusts $80 billion."Countrywide plans not to absorb the $8.4-billion reduction in mortgage payments itself, even though it was Countrywide's own conduct of which the attorneys general complained," the fund said in the complaint filed Monday in New York State Supreme Court in Manhattan. Under the settlement, the mortgage lender would "pass most or all of that reduction on to the trusts that purchased mortgage loans from Countrywide," the fund said in the complaint."We are in the process of reviewing the complaint and therefore we cannot comment on specific claims," said Shirley Norton, a Bank of America spokeswoman. "We are, however, disappointed in this attack on a program intended to keep as many as 400,000 at-risk families in their homes and, together with similar programs across the industry, stabilize the nation's housing market."
Bank of America reached the settlement in October. It didn't admit or deny any wrongdoing under the accords.