""US Bancorp"":http://www.usbank.com/index.html joined a field of investors taking issue with the $8.5-billion deal proposed by ""Bank of America"":https://www.bankofamerica.com/, filing suit to recover losses over alleged falsifications, according to multiple news outlets. Following a filing in New York by the FDIC Monday, the suit emerges as the newest in a barrage of legal maneuvers to hit the bank over bad mortgage-backed securities.[IMAGE]
The litigation, which Bank of America continues to fend off as it seeks to finalize a mega settlement, concerns loans allegedly misrepresented by Countrywide Financial Corp., which the mortgage giant acquired in a major purchase during the financial crisis.
Lodging the complaint in a Manhattan-based state court, U.S. Bank pursued compensation from the new owner of the assets under Countrywide by alleging a series of misrepresentations in the underwriting quality and borrower details for 4,884 loans in a $1.75-billion mortgage pool, according to ""_Reuters_"":http://www.reuters.com/article/2011/08/30/us-bankofamerica-usbancorp-lawsuit-idUSTRE77T36F20110830.
The news service quoted the complaint by U.S. Bank as saying the bad loans ""began to become delinquent and default at a startling rate,"" with 66 percent, or some 520, of a sample of 786 loans failing to accurately represent borrower eligibility and other information.
The suit asks Bank of America to sign off on a repurchase agreement for all the busted loans as offered up by U.S. Bank, which _Reuters_ reporting the bank as saying that the former has refused to acquiesce or make the needed changes.[COLUMN_BREAK]
Spokespeople for neither Bank of America nor U.S. Bank could be immediately reached for comment.
It is unclear how Bank of America will respond to the continuing suits.
According to _Reuters_, CEO Brian Moynihan made remarks in 2010 that signaled his intentions to fend off suits aiming for Bank of America to buy back bad loans in ""hand-to-hand combat.""
Nevertheless, Bank of America gave the go-ahead this year for massive settlements with other companies and bond insurers, including GSEs ""Fannie Mae"":http://www.fanniemae.com/kb/index?page=home and ""Freddie Mac"":http://www.freddiemac.com/ and ""Assured Guaranty Ltd"":http://www.assuredguaranty.com/, the news service reports.
If a judge signs off on the current $8.5-billion settlement, Bank of America could wipe its hands clean of the bad mortgage-backed securities that continue to rile the mortgage giant years after it acquired Countrywide.
The move by U.S. Bank is the latest in a series of legal challenges to the mega settlement.
On Monday the ""FDIC"":http://www.fdic.gov/, an erstwhile regulatory authority, filed concerns in a New York federal court that it still needed to see the figures and other information before the settlement moves forward.
Lawrence Grayson, a spokesperson for Bank of America, told _MReport_ in an e-mail that the mortgage giant believes ""that the trustee [the FDIC] acted reasonably in entering into the settlement, and that there are compelling reasons why the agreement should receive judicial approval.""
Late Tuesday, a ""_Bloomberg News_"":http://www.bloomberg.com/news/2011-08-30/homeowners-sue-to-block-8-5-billion-bofa-mortgage-settlement.html story added to the settlement brouhaha by reporting that four homebuyers had also filed suit to halt the $8.5-billion deal.
""The settlement agreement will speed up foreclosures, perpetuate existing servicing abuses in the system, and undermine federal programs designed to stabilize the housing market,"" _Bloomberg_ quoted their filing as saying.