BofA loses bid to dismiss lawsuit
Bank of America Corp. has lost a bid to dismiss most of a combined lawsuit accusing its Countrywide unit of steering borrowers into subprime and other high-risk mortgages during the housing boom.
In a May 18 ruling, U.S. District Judge Dana Sabraw in San Diego said borrowers represented in several lawsuits could pursue claims that Calabasas-based Countrywide Financial Corp. engaged in racketeering and unfair business practices before it was acquired by Charlotte, N.C.-based BofA.
Borrower lawsuits against Bank of America and Countrywide have been consolidated into a single case before Sabraw. But he recently sent several cases filed by states back to state courts, including one in which California Atty. Gen. Jerry Brown sued Countrywide co-founder Angelo Mozilo.
Bank of America acquired Countrywide, which was once the nation’s largest mortgage company, for $2.5 billion in stock last July.
In October, BofA settled claims made against it and Countrywide by the attorneys general of 11 states, agreeing to mortgage modifications that it said could save 390,000 borrowers as much as $8.4 million. But Mozilo and other Countrywide officials were not covered by the settlement.
“We are pleased that we are helping the ultimate victims of the mortgage scheme that has nearly destroyed our economy,” plaintiffs’ lawyer Joe R. Whatley Jr. said in a statement. “We intend to continue to prosecute this action until those who obtained subprime mortgages from Countrywide are adequately compensated.”
Attorneys for Bank of America and Countrywide couldn’t be reached for comment Thursday.
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