August 15, 2011 / 8:53 PM / 7 years ago

BofA gets boost as Countrywide cases are combined

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.

A Countrywide branch location is seen in Burlington, Massachusetts May 5, 2008. REUTERS/Brian Snyder

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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