Countrywide Sued by Fund Over $8.4 Billion Loan Deal

Countrywide Sued by Fund Over $8.4 Billion Loan Deal (Update1)


Excellent Article by Mr. Mortgage: Mortgage Security Holder Stands up to Bofa

By Patricia Hurtado

Dec. 1 (Bloomberg) — Countrywide Financial Corp., the home lender acquired by Bank of America Corp., was sued by Greenwich Financial Services Fund over claims an agreement to reduce payments on mortgages by $8.4 billion would hurt investors.

The hedge fund claims investors will be harmed by Bank of America’s settlement, reached on behalf of Countrywide, with 15 state attorneys general. The value of trusts that bought 400,000 mortgages will decline under the deal, the fund said.

In the proposed class action, or group lawsuit, the Greenwich, Connecticut-based fund demands a declaration that “Countrywide must purchase at par every mortgage loan that it sold to any of the 374 securitization trusts,” David Grais, a lawyer for the fund said today in an e-mailed statement. Grais said Countrywide could owe $80 billion to the trusts.

“Countrywide plans not to absorb the $8.4 billion reduction in mortgage payments itself, even though it was Countrywide’s own conduct of which the attorneys general complained,” the fund said in the complaint filed today in New York State Supreme Court in Manhattan. Under the settlement, the mortgage lender would “pass most or all of that reduction on to the trusts that purchased mortgage loans from Countrywide,” the fund said in the complaint.

Bank of America reached the settlement in October with 15 state attorneys general. The bank didn’t admit or deny any wrongdoing under the accords. Shirley Norton, a Bank of America spokeswoman, didn’t immediately return a voice-mail seeking comment on today’s complaint.

374 Securitization Trusts

Grais said in his e-mail that the hedge fund is seeking a declaration that “Countrywide must purchase at par every mortgage loan that it sold to any of the 374 securitization trusts.”

Countrywide must change at least 50,000 mortgage loans between today, when its modification program starts, and March 31, he said. The lender has said it may modify as many as 400,000 loans, Grais said.

“We believe that the average unpaid principal balance of these loans is approximately $200,000. If so, and if the court grants the declaration we seek in this complaint, then Countrywide (and its parent Bank of America) would be liable to pay the trusts approximately $80 billion for the loans it modifies,” he said.

The case is Greenwich Financial Services Distressed Mortgage Fund 3 v. Countrywide Financial Corp., New York State Supreme Court (Manhattan).

To contact the reporter on this story: Patricia Hurtado in Manhattan at

Last Updated: December 1, 2008 14:52 EST

11 Responses

  1. It is incredible to see just how out of touch our main stream media is.

    I have been researching the Mortgage predatory lending market for some time now, gathering a whole bunch of dirt on Angelo Mozilo, David Sambol, Kurland and others at Countrywide Home Loans. I uncovered more than a little dirt on Bank of America and its CEO Kenneth Lewis. But what moved me the most was coming across this Lone Ranger like character named David Merritt.

    This is a guy who got suckered into one of those Countrywide Predatory loans. He and his wife are first time home buyers who wanted to put 5 to 10 % down on their $729,000 home in Silicon Valley California – 2 miles from Yahoo headquarters, 4 from google and 5 from Apple.

    With just 2 days to remove their loan contingency, and with at least two other lenders ready to sell them a relatively decent mortgage, Countrywide talked them out of going with the competition by presenting a 1 to 3 percent, FHA Good Faith Estimate and declared: “if you can find someone to beat this loan, then go with them and we’ll pay the closing costs.”

    Countrywide staff were trained on how to determine how much knowledge a home buyer had, and they knew that the Merritts were suckers to be taken. Once they fired the other lenders and committed themselves to Countrywide, the Merritts found themselves locked into a 100% financing Pay Option ARM and HELOC which was destined to charged them over 2 million dollars. Countrywide had a policy of talking buyers out of putting down payments, and convincing them that they would give them a loan that was better. In fact, they would always tell home buyers that No One Could beat them and the truth was that they did beat everyone at the application stage in order to remove all the competition, but they left out that by the time the home buyer was closing escrow, most competitors would have done better.

    The Merritts signed a loan that was charging twice as much as the average lender. What is more is that they signed a loan which Countrywide assigned Mortgage Electronic Registration System as a lender. As it turns out, MERS was designed to be a front company which allows: 1) Note holders to hide from public scrutiny; 2) the duplication of one loan note that could be sold off to 2 or more investors or mortgage backed security pools: 3) evasion of paying local recorder fees; 4) Overriding state legislatures recording the laws on recording liens, beneficiaries and holders in due course; 5) attacking Public Policy in regards to its goals of protecting consumers and lenders from fraud via recording laws; and last, but not least, 6) being a conduit for billions of dollars to pass right by Uncle Sam and into Cayman or Canadian banks where no federal taxes can touch it.

    This is how Countrywide rose to the top. And they intentionally targeted elderly, minorities and unsophisticated first time buyers.

    Now in July 2008 Bank of America bought Countrywide out for 2 billion dollars. A company with assets that exceeded 20 billion, and servicing machine that churned out billions more.

    Bank of America went to all the states Attorneys Generals and asked them to bring lawsuits on behalf of their state citizens against Countrywide and to already agree to cut a sweet settlement deal with Bank of America. This was a strategy to persuade that Public that BofA was sincere about cleaning up the mess Mozilo and cronies created. But what is left out is that they are also trying to cut off home buyers ability to charge BofA with the predatory loans of Countrywide.

    Behind the scenes, BofA has been supporting Countrywide since 1969. It has always been in the predatory loan business, but through other front companies. For the longest, evidence shows, Kenneth Lewis was very close allies with Mozilo and planned with him to defraud Americans out of their home equity.

    It is so strange to see so many Americans enslaved to the Banking and Finance gangsters and not even know it, or if they do, just accept it.

    David Merritt is literally one of the 21st Century modern epics “David versus Goliath.” And all the has is a little sling and a rock against Goliaths billion dollar war armor. Check out some of his thoughts on many issues at, but the 9th Circuit Court of Appeals has before it Merritt v. Countrywide, BofA, Wells Fargo et al, Docket No 09-17678 where he has charged straight at these Greedsters with RICO and other federal violation. And in Santa Clara Superior Court Merritt v. Mozilo et al No. 109CV159993.

    He is actually looking for other victims who have deeds of trust assigned to MERS and he wishes to help in anyway possible to fight these folks offensively , he prefers, but he has enough information to help defensively as well. Lawyers from around the country taps into this Big David. So circulate the word.

    Mark Doyle

  2. Country Wide is to busy buying foreclosed homes to collateralize to be bothered with a law suit. Scooping up homes to sell to the fed or fdic, or maybe they are scooping them up cheap figuring the market has bottomed.
    What a racket.
    No way for prices of homes to go, but down. Gooberment cannot support home prices forever. All the financial stuff they are doing, as soon as it stops, home prices go down, down, down.
    Why pay on a depreciating asset?? Stop paying your mortgages now!!!

  3. I’m currently having trouble finding SASCO 2005 RF-5 among the SEC filings. Thought I had found some filings back some months ago, but assumed they got unlisted. Can anyone help?

    “Plenty of remedies available even after foreclosure sale and even after eviction.”

    Neil, what’s the statute of limitations and remedies available if one SOLD one’s Massachusetts home April 2005 to prevent foreclosure, if one later discovers fraud, TILA and other violations?

    Mike, how goes the battle with Lehman?


  4. You Might want to add LaSalle, Credit Suisse First Boston Mortgage Securities. Also, I have found when you look at the prospectus that is filed with the SEC, it shows their gameplan and lists all of the players, like issuing entity, sponsor, depositor, servicer, subservicer, Trustee, Swap Counterparty, Cap Counterparty and a whole host of co-conspirators

  5. If you download the 10k of the major lenders (Countrywide, Ocwen, Quicken Loans, Intuit, Ocwen, Wells Fargo, Taylor Bean etc.) and their fronts (like Aurora for Lehman), I will post it to help a large number of people.

  6. Plenty of remedies available even after foreclosure sale and even after eviction.

  7. I received this correspondence this evening regarding the Countrywide purchase of Greenpoint Mortgage loans effective November 29, 2008. I was unaware of Greenpoint selling off a portion of its assets in 2006 to Private Capital Fund and the travesty that followed for this particular mortgage holder. Does anyone have any insight to this post I received?? Please share.

    Hi Diane,

    I intend to email you directly about the nightmare I’m in re: a company Greenpoint sold our mortgage to, I wanted to post a note for anyone who might see this. If Greenpoint sold your mortgage to Private Capitol Group in Jericho NY, we need to talk.

    Greenpoint Mortgage, (GPM was actually North Fork Bank in NYC), sold our mortgage in the summer of 2006, and sent us a letter telling us they had. The first and only communication we received from Private Capitol Group, (PCG), was foreclosure papers. PCG is a holding of Copperfield Investment, which went BK in 2007.

    From that point forward to today, PCG, or their representatives, have broken EVERY state or federal law related to mortgages, escrow, debt, credit, EXCEPT they actually did file a mortgage interest payment report with the IRS, (which surprised me). Add to that at LEAST the two documented cases of mail fraud I have the evidence of.

    They tried to rob me of my house. FIrst by ignoring my repeated verbal & written request for a balance due ~7 weeks before auction. I finally had to get an attorney, and then I only got the balance < 36 hrs before the auction. I had JUST enough time to overnight FedEx a cashier’s check to stop the auction. THEN I had to try to get back the ~2500.00 of false or spurious charges included in the balance due. As we went into the middle of 2007, PCG stopped responding to my correspondence.

    By Aug, I got fed up and stopped paying the mortgage, assuming I would hear from them. I didn’t. I have recently been talking with a company in N Carolina who claims they represent PCG, but they do not have accurate dates or amounts and don’t seem to want to produce an accounting reconciliation to show the balance due. When I pushed them for an escrow accounting, they sent a five LINE letter with three LINES showing a date column and amount column.

    One of the amounts had () around it, they must have thought that made it an ‘accounting’. The amounts were inaccurate and the dates were incorrect. Highly suspicious.

    There is much much more, than just this sketch, but the Copperfield – PCG connection is tied to a Bear Stearns exec, three Bear Sterns traders in jail for insider trading, and it’s looking like they might also be tied to North Fork Bank/GPM, and you may not know it, but North Fork was who tipped the FBI about Spitzer, (remember Spitzer was NY’s AG and was after mortgage & student loan company’s – something he vowed to continue as Gov).

    It’s taken months to begin to see posts concerning GPM, etc. and there still is nothing about other PCG victims. Diane will have a direct email for me as I will be sending her a more detailed eMail so she can see other crimes that are being perpetrated against people in foreclosure. This is reprehensible behavior from mortgage companies. I DID not exaggerate when I said EVERY sate and federal law I’ve found.

    My foreclosure experience has been one of those “had I only known” before situations, but legal help was beyond my reach at the time, I was in the third year of a four year SS disability nightmare.

  8. When as her p.r. I stepped up and reinstated my late mother’s 2000 fraudulent mortgage in 2005, WaMu apparently had a special REMIC to securitize it with: SASCO 2005 RF-5 Reperforming FHA/VA Loans.

    Can’t wait to see what REMIC it was in while it was DISTRESSED.

    I have a free trial subscription to 10K Filings until Dec 11, if anyone needs me to look something up. Any 10K or other filings on SASCO 2005 RF-5 would be greatly appreciated, as I can’t find anything anymore.


  9. Plaintiff name says it all:
    Greenwich Financial Services DISTRESSED MORTGAGE FUND 3……Aw gee, William Frey, proprietor of Greenwich Financial Services is upset because if BoA does enough mods with these CW CDOs, there might be fewer defaults and he won’t be able to count on CW’s reknown mortgage servicing fraud to capitalize on his CDS bets anymore. DISTRESSED MORTGAGE FUND ? Sure doesn’t sound like anything good. Oh yeah, Short that subprime when you know servicers are manufacturing defaults….These bets can’t lose with the game rigged the way it is.
    So, Mr. Frey….How exactly does Greenwich Financial Services DISTRESSED MORTGAGE FUND 3 make money?

  10. Who wants to pull the cord?

  11. Countrywide deserves to be flushed down the toilet along with the rest of them.

    Steve Cisko
    San Diego, CA.

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