Investors Sue Countrywide Over 'Massive Fraud'
Their triple-A-rated securities are now junk, they claim
By Evann Gastaldo,  Newser Staff
Posted Jan 26, 2011 9:17 AM CST
In this March 7, 2008 file photo, Angelo Mozilo, founder and former CEO of Countrywide Financial Corporation, center, testifies in a hearing on Capitol Hill in Washington.   (AP Photos/Susan Walsh, File)
camera-icon View 1 more image

(Newser) – Investors are suing Bank of America’s Countrywide mortgage unit, claiming they were fraudulently led into purchasing supposedly triple-A-rated mortgage-backed securities that turned out to be junk. Between 2005 and 2007, the investors bought hundreds of millions of dollars of securities that were supposed to be “conservative” and “low-risk.” But Countrywide misrepresented just how safe those securities were, and also ignored its own underwriting guidelines, the lawsuit claims.

Because of that, most of the securities now have “junk” ratings, and the investors say they’ve suffered “significant losses,” Reuters reports. A Bank of America spokesperson says in a statement, “On first glance these sound like large, sophisticated investors who now want to blame someone for the fact that the declining economy caused their investment to lose value.” Former Countrywide officials including CEO Angelo Mozilo are named as defendants.

 

My Take on This Story
Show results without voting  |  
4%
10%
10%
6%
64%
6%