BofA investors demand mortgage buybacks

A group of investors in a securitization of $2.8 billion mortgage-backed bonds originated by Bank of America’s Countrywide Financial unit filed a complaint in New York State Supreme Court yesterday in attempt to force the bank into a mortgage buyback. According to Bloomberg News, the complaint alleges that the bank breached “representations and warranties” on the mortgage loans underwriting their securities, at least 413 of which had loan-to-value ratios of more than 95 percent, when Countrywide had claimed no loan had such a ratio. The investors claim the bank’s misrepresentations “materially and adversely affected” their interests. Also named in the lawsuit is investor trustee Bank of New York Mellon, which the investors say should have demanded that Bank of America repurchase the loans. In October, a report by JPMorgan said mortgage repurchases of the kind these investors are demanding may ultimately cost U.S. lenders $90 billion. [Bloomberg]