Interesting NY Ruling Creates Some Unusual Questions About Bank of America and Countrywide.

As I have previously stated the alleged merger of Bank of America with Countrywide is by no means a foregone conclusion, although lawyers invoke the merger as the basis for ownership and authority over loans. As between insurance companies and Bank of America the merger is referred to as de facto, which means that for all intents and purposes we are going to treat the merger as though it happened.

But the real story is not that simple and the assumption that the ownership (as opposed to the servicing) of any loans changed hands is just plain wrong.

The truth about Countrywide Home Loans (CHL) as I know it and as it is reported by CHL, Bank of America and others:

  1. Countrywide was not a lender, although there were times that it did loan money to a select group of individuals.
  2. Countrywide was an aggregator of data that was used as the basis of claiming securitization of loans.
  3. Countrywide earned fees for posing as the lender in millions of loans and for “servicing” of the loans that were nearly all brokered by Countrywide.
  4. Those loans were funded by securities brokerage firms (investment banks) through several conduits in which money appeared on the closing table from undisclosed sources.
  5. When it went bust it had virtually no assets listed on any schedule that consisted of consumer loans using residential property as collateral.
  6. Bank of America created Red Oak Merger Corp. which (a) merged with CHL and (b) changed its name to BAC Home Loans.
  7. How, when and even whether BAC was ever absorbed by Bank of America is unclear from the financial statement issued by bank of America.
  8. Bank of America claims, for some purposes, that is is a successor to CHL when it comes to enforcement of loans.
  9. So the question is whether it really is a successor who would be liable for funding repurchase agreements on loans that were sold under false pretenses. Bank of America says no.
  10. And it frequently cites in such suits with insurance carriers and investors that it is not actually the successor and that it never agreed to become one such that it could be liable for lending violations or securities violations in which CHL participated.
  11. If the court agrees that Bank of America is not a successor to liabilities of CHL then it follows that its claim to being a “successor” to CHL is at least deserving of a footnote of not an outright denial based upon their own conduct.
  12. If the court imposes liability on Bank of America as successor then the question still remains “successor to what?”

the court erred in failing to grant BAC’s motion to strike Ambac’s jury demand for its secondary-liability claim against BAC. Ambac is not entitled to a jury trial on its claims against BAC because the jury demand, regardless of whether or not it is disallowed by the contractual jury waiver, seeks more than “a judgment for a sum of money only” under CPLR 4101(1). It also seeks a declaration that BAC is Countrywide’s successor by virtue of a de facto merger, which would render BAC jointly liable for any unpaid “judgment for a sum of money” against Countrywide. This is an equitable remedy, which must be decided by a court.

THIS CONSTITUTES THE DECISION AND ORDER OF THE SUPREME COURT, APPELLATE DIVISION, FIRST DEPARTMENT.

ENTERED: SEPTEMBER 17, 2019

Ambac Assurance Corp. v. Countrywide Home Loans Inc., 118 AD3d 644 (N.Y. App. Div. 2019)

4 Responses

  1. @ ALL & Javagold:

    As commented several times in the past, the blog’s post is referring to, as a matter of law, NON BANKING ACTIVITIES, i.e. securitization & servicing activities by a so called “lender/bank/etc……..” <———.

  2. Also, the GSEs can give answers, but you cannot get anything from them – not even under the FOIA.

  3. Java – the only ones who can give any answers are the ones who bailed out the banks. They blamed the people, and consider us – “dead and buried.”

    The only way any of this could have happened is because “loans” were not true mortgages.

  4. So how is that I originated with BOA NA. And they switch servicing to BAC Home Loans WITHOUT any assignment of mortgage and give me a completely different account number , yet COUNTRYWIDE, who I never ever had any transactions with, is on town records as the company that was paying the property taxes for the first 5 years. I need answers and yet never get any from BOA. The clerks office, tax assessor or the court !!!!

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