Democrat seeks GOP names on Countrywide VIP loan list (Reuters)

WASHINGTON (Reuters) – The top Democratic member of a congressional oversight panel turned up the heat on its Republican chairman on Tuesday to identify the four GOP lawmakers who got special treatment in the controversial "Friends of Angelo" mortgage program run by the now-defunct Countrywide Financial Corp.

Representative Elijah Cummings of Maryland, the ranking Democrat on the House Oversight and Government Reform Committee, sent a letter on Tuesday to the panel's chairman, Representative Darrell Issa, a California Republican, in which he pressed for disclosure of all four GOP congressmen's names. In the letter, Cummings took issue with how Issa has handled the investigation into the Countrywide VIP loan program.

"In response to your subpoena, the Committee obtained information about four previously unknown instances in which Members of Congress received VIP loans, including three current Republican House Members and one former Republican House Member. After discovering that all of these Members are Republicans, you sent a letter on December 16, 2011, referring their cases to the House Ethics Committee," Cummings wrote in the letter dated January 17th to Issa.

The "Friends of Angelo" program's name refers to Angelo Mozilo, the former chairman and CEO of Countrywide, the California-based lender that became a dominant player in the mortgage business during the housing boom. In October 2010, Mozilo agreed to pay $67.5 million in a combined penalty and "disgorgement of ill-gotten gains" to settle SEC charges of fraud and insider trading related to Countrywide's risky subprime mortgage lending practices. At the time, the U.S. Securities and Exchange Commission said the $22.5 million fine was the largest ever paid in an SEC settlement by a senior executive of a publicly traded company.

Issa has waged a high-profile campaign for three years to obtain mortgage files of members of Congress who received special treatment from Countrywide.

POTENTIAL FOR A POLITICAL FIRESTORM

Disclosures about members of Congress getting discounted loans and other financial perks have the potential for a huge backlash in an election year.

Veteran GOP Representatives Howard McKeon and Elton Gallegly, both Republicans of California, have admitted their names are on a list of members of the U.S. House of Representatives who received discounted loans from Countrywide, according to the Saturday edition of The Wall Street Journal.

Cummings criticized Issa for reversing course during the investigation after previously saying he would disclose the names of any lawmakers who received VIP loans. Instead, after receiving information about four previously unknown instances of politicians winning favor from the mortgage lender last month, Issa sent the names to the House Ethics Committee.

"Since you failed to consult with me before taking these actions, I have several questions about how you want to proceed with the investigation," Cummings wrote.

The Maryland Democrat called on Issa to name the two remaining loan recipients. Cummings also wanted to know why Issa planned to interview Countrywide officials who were involved in the "Friends of Angelo" loan dealings.

"Rather than publicly identifying the four additional Members who received Countrywide loans or attempting to determine whether they took any official actions on behalf of Countrywide, you chose instead to refer their cases to the Ethics Committee," Cummings wrote.

"These sudden shifts raise key questions about how you plan to proceed with this investigation," he added.

Cummings also asked if Issa intends to schedule public hearings on the investigation and whether he will call on Mozilo to testify.

A spokesman for Issa was not immediately available for comment late on Tuesday.

After the housing bust and widespread defaults on subprime mortgages, the failing Countrywide was acquired by Bank of America in 2008.

(Reporting By Margaret Chadbourn; Editing by Jan Paschal)

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BofA sued over $1.75 billion Countrywide mortgage pool (Reuters)

NEW YORK/CHARLOTTE, North Carolina (Reuters) – Bank of America Corp (BAC.N) was sued by the trustee of a $1.75 billion mortgage pool, which seeks to force the bank to buy back the underlying loans because of alleged misrepresentations in how they were made.

The lawsuit by the banking unit of US Bancorp (USB.N) is the latest of a number of suits seeking to recover investor losses tied to risky mortgage loans issued by Countrywide Financial Corp, which Bank of America bought in 2008.

In a complaint filed in a New York state court in Manhattan, U.S. Bank said Countrywide, which issued the 4,484 loans in the HarborView Mortgage Loan Trust 2005-10, materially breached its obligations by systemically misrepresenting the quality of its underwriting and loan documentation.

Soon after the loans were sold to the trust, they "began to become delinquent and default at a startling rate," the complaint said. Out of a sample of 786 of the loans, 520, or 66 percent, breached one or more representations, it said.

U.S. Bank said it demanded that Bank of America fix the breaches or buy back the loans as it had agreed to do, but that it has refused and offered no reason for this refusal.

The lawsuit demands that the bank repurchase all the loans in the pool, or at least those it knows have problems and are hurting investors in the trust.

Bank of America spokesman Lawrence Grayson said the bank is still reviewing the complaint, but the bank does not believe U.S. Bank has the right to demand repurchases under the mortgage pool agreements, or can demand repurchase for loans that are not delinquent or have been paid off.

The Charlotte, North Carolina-based bank paid $2.5 billion to buy Countrywide, but writedowns and legal costs have pushed the estimated cost of that purchase to more than $30 billion.

Last fall, Chief Executive Brian Moynihan said the bank would fight repurchase claims by investors, calling the process "hand-to-hand combat."

In 2011, however, he has agreed to large settlements with mortgage financiers Fannie Mae (FNMA.OB) and Freddie Mac (FMCC.OB), as well as billionaire Wilbur Ross' bond insurer Assured Guaranty Ltd (AGO.N). Then in June, he agreed to pay $8.5 billion to settle a wide range of Countrywide claims.

The $8.5 billion pact requires court approval but has drawn objections from several dozen investors, as well as the Federal Deposit Insurance Corp and the New York and Delaware attorneys general. Bank of America also faces a $10 billion lawsuit by bailed-out insurer American International Group Inc (AIG.N).

Bank of America shares closed down 27 cents, or 3.2 percent, to $8.12 on the New York Stock Exchange.

The case is U.S. Bank NA v. Countrywide Home Loans Inc et al, New York State Supreme Court, New York County, No. 652388/2011.

(Reporting by Jonathan Stempel and Joe Rauch; Editing by Derek Caney, Tim Dobbyn and Carol Bishopric)

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BofA gets boost as Countrywide cases are combined (Reuters)

NEW YORK (Reuters) – Bank of America Corp (BAC.N) won what could prove a legal victory as eight mortgage securities lawsuits against its Countrywide unit were combined into a single case before a federal judge who has ruled favorably for the bank in the past.

The U.S. Judicial Panel on Multidistrict Litigation assigned the cases to U.S. District Judge Mariana Pfaelzer, who threw out a large number of claims in a similar case against the bank.

"In centralizing these eight Countrywide MBS actions before Judge Pfaelzer, we take advantage of her familiarity with the issues in this litigation and make efficient use of judicial resources," wrote Kathryn Vratil, acting chairman of the judicial panel, in a Monday order.

Bank of America faces dozens of lawsuits stemming from its 2008 purchase of Countrywide Financial Corp, once the largest of the U.S. mortgage lenders.

Many of these cases were brought by investors in securities backed by Countrywide home loans who allege they were misled about the risks and quality of underwriting.

In a ruling on November 4, Pfaelzer narrowed the potential recovery by various investors in Countrywide mortgage-backed securities, saying some investors did not sufficiently demonstrate they suffered an injury for the securities they bought and that others waited too long to sue.

After plaintiffs filed an amended complaint, Pfaelzer granted in April Bank of America's request to dismiss various claims, stating it cannot be held liable for actions of a unit.

Bank of America has said these rulings reduced the amount of securities at issue to $31 billion from $352 billion.

The lawsuits are separate from the bank's $8.5 billion settlement reached in June with other mortgage securities investors. Many of those investors, as well as regulators, including New York's and Delaware's attorneys general, are mounting challenges to that accord.

The case is In Re: Countrywide Financial Corp Mortgage-backed Securities Litigation, U.S. District Court, Central District of California, No. 11-md-02265.

(Reporting by Moira Herbst; additional reporting by Jonathan Stempel; editing by Andre Grenon)

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Bank of America CEO says he regrets Countrywide (Reuters)

NEW YORK/CHARLOTTE (Reuters) – Bank of America Corp (BAC.N) Chief Executive Brian Moynihan said on Wednesday he often regrets the bank's 2008 purchase of mortgage lender Countrywide, but the loan losses from that deal will not force the bank to issue new shares.

It was the first time the bank has expressed regret over its 2008 Countrywide purchase, which has saddled Bank of America with billions of dollars of mortgage losses.

Moynihan's admission shows the extent to which the bank is still reeling from the housing crisis, and the intensity of investor fear that losses from that deal will force the bank to issue more shares to bolster its balance sheet.

"Obviously there aren't many days when I wake up and think positively about the Countrywide acquisition in 2008," said Moynihan during a conference call arranged by Fairholme Capital Management, one of the bank's biggest shareholders.

The bank's shares, down as much as 11.3 percent on Wednesday, have lost about a quarter of their value over the last week.

Moynihan, who took over as CEO in the beginning of 2010, said the bank will not issue new shares after having issued so many after the financial crisis of 2008 and 2009. Bank of America now has more than 10 billion shares outstanding, compared with 4.5 billion in mid-2008, when Ken Lewis was chief executive and big acquisitions of troubled companies seemed like a good strategy.

Despite assurances that a new share offering is not on the horizon, Moynihan gave little guidance on when shareholders can expect money to be returned to them either through a dividend increase or share repurchases.

Earlier this year, the Federal Reserve rejected the bank's request to increase its current quarterly dividend of 1 cent per share. BofA's management initially told shareholders to expect a dividend increase in the second half of 2011, but that appears increasingly unlikely.

Moynihan said the bank would raise its dividend when it received approval but said he has had "no success so far" in predicting when it might increase.

"We will ask for a dividend when we are darn well sure we'll get approval and we're not going to ask a minute sooner," Moynihan said.

A NUMBER OF LEVERS

Moynihan said the bank is working to meet its goal of annual earnings of $45 billion -- before taxes and setting aside money for loan losses -- by 2013. The bank first outlined that target this March at its investor day presentation.

But he said a sputtering economy and low interest rates are undermining the bank's efforts.

"To get to the $45 billion level you need to have an economy that is functioning more normally than the economy is now," he said.

To help offset slower revenue growth, BofA is introducing a cost-cutting plan. Moynihan said the plan -- known as New BAC -- will be publicly discussed when the bank announces third-quarter results in October, but he noted the bank could trim up to $1.5 billion per quarter in expenses.

Moynihan was speaking on a 90-minute conference call that included more than 6,000 investors.

Analysts in June estimated that the bank could need to boost capital by $50 billion to comply with new regulatory requirements. Moynihan said last month that the bank could generate the new capital it needs through earnings.

The bank has other ways to improve its capital position, including selling assets, said Chief Financial Officer Bruce Thompson.

"As we look at capital and growing capital beyond the end of 2012, we have a number of levers that we will look to continue to utilize," Thompson said.

But the bank may face legal liabilities from mortgages and mortgage securities that are difficult to forecast.

Chris Gamaitoni, an analyst at Compass Point Research & Trading, wrote in a report on Wednesday that in the worst case scenario, the bank could have to buy back some $62.2 billion of bad mortgages from investors. That figure is about $44.4 billion more than the funds the bank has already set aside to cover the liability.

(Additional reporting by Dan Wilchins; Editing by Robert MacMillan, Gerald E. McCormick and Steve Orlofsky)

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Bank of America hit with new Countrywide lawsuit (AP)

NEW YORK – Bank of America Corp. is facing a new lawsuit filed by a group of shareholders of mortgage giant Countrywide Financial Corp., which the bank bought in 2008.

The group of investors, which include BlackRock funds, T. Rowe Price Group Inc., TIAA-CREF and several pension funds including the California Public Employees' Retirement System had earlier rejected a $624 million settlement struck last year deal, saying the terms were inadequate. The lawsuit accused Countrywide of misleading shareholders about its finances and lending practices.

Blair Nicholas, a partner at the law firm Bernstein Litowitz Berger & Grossmann, representing the investors said they will present their claims before a jury. Bank of America spokesman Lawrence Grayson said: "We intend to vigorously defend these claims."

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Appeals court reverses Countrywide suit dismissal (AP)

LOS ANGELES – An appeals court has overturned the dismissal of a class-action lawsuit brought by investors against mortgage giant Countrywide Financial Corp.

The move by a panel of the California 2nd District Court of Appeal reverses the decision by a Superior Court judge in Los Angeles last year. That court threw out the complaint on grounds that a state court had no jurisdiction to hear the case, citing the U.S. Securities Act.

In the ruling issued Wednesday, the appeals court disagreed, concluding such a complaint could be heard in state court.

The decision allows the case to proceed.

The investors claim Countrywide had false or misleading statements in documentation for the mortgage-backed securities that they bought from the lender between 2005 and 2007.

Bank of America acquired Countrywide in July 2008.

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Court OKs $624M payout to Countrywide investors (AP)

LOS ANGELES – A federal judge on Friday approved a $624 million settlement in a lawsuit brought by several New York public pension funds against fallen mortgage giant Countrywide Financial Corp.

The settlement, a version of which was had been originally hammered out last year, also calls for KPMG, Countrywide's accounting firm, to pay $24 million of the total.

In their lawsuit, the New York State Common Retirement Fund and five New York public pension funds claimed that Countrywide hid how risky its business had become during the housing market's boom years.

It's not immediately clear how much the New York funds or other Countrywide investors will receive, New York City Law Department spokeswoman Connie Pankratz said late Friday.

Still, New York officials touted the deal, calling it one of the largest securities fraud settlements in U.S. history.

"This settlement vindicates investors who were deceived by Countrywide's involvement in sub-prime mortgage lending," Thomas P. DiNapoli, New York state comptroller, said in a statement.

The settlement approved by U.S. District Judge Mariana Pfaelzer in Los Angeles wasn't good enough for some Countrywide investors, however.

Some 33 large institutional investors that held shares in the lender decided to opt out of the settlement and pursue claims separately, said Blair Nicholas, an attorney representing 16 of the institutional investors, including the California Public Employees' Retirement System, BlackRock Inc., American Century and T. Rowe Price.

"My clients, if they can't resolve their claims with Countrywide directly, then they're fully committed to try our case before a jury and maximize the recovery of our damages," Nicholas said.

Some $22.5 million of the settlement was set aside for up to two years toward future claims by investors who opted out of the deal.

Calabasas-based Countrywide was once the nation's largest mortgage lender. It was acquired by Bank of America in 2008.

A call seeking comment from Bank of America, which is based in Charlotte, N.C., was not immediately returned late Friday.

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Court OKs $624M payout to Countrywide investors (AP)

LOS ANGELES – A federal judge on Friday approved a $624 million settlement in a lawsuit brought by several New York public pension funds against fallen mortgage giant Countrywide Financial Corp.

The settlement, a version of which was had been originally hammered out last year, also calls for KPMG, Countrywide's accounting firm, to pay $24 million of the total.

In their lawsuit, the New York State Common Retirement Fund and five New York public pension funds claimed that Countrywide hid how risky its business had become during the housing market's boom years.

It's not immediately clear how much the New York funds or other Countrywide investors will receive, New York City Law Department spokeswoman Connie Pankratz said late Friday.

Still, New York officials touted the deal, calling it one of the largest securities fraud settlements in U.S. history.

"This settlement vindicates investors who were deceived by Countrywide's involvement in sub-prime mortgage lending," Thomas P. DiNapoli, New York state comptroller, said in a statement.

The settlement approved by U.S. District Judge Mariana Pfaelzer in Los Angeles wasn't good enough for some Countrywide investors, however.

Some 33 large institutional investors that held shares in the lender decided to opt out of the settlement and pursue claims separately, said Blair Nicholas, an attorney representing 16 of the institutional investors, including the California Public Employees' Retirement System, BlackRock Inc., American Century and T. Rowe Price.

"My clients, if they can't resolve their claims with Countrywide directly, then they're fully committed to try our case before a jury and maximize the recovery of our damages," Nicholas said.

Some $22.5 million of the settlement was set aside for up to two years toward future claims by investors who opted out of the deal.

Calabasas-based Countrywide was once the nation's largest mortgage lender. It was acquired by Bank of America in 2008.

A call seeking comment from Bank of America, which is based in Charlotte, N.C., was not immediately returned late Friday.

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