Bank of America on Thursday rebuffed claims by a lawyer for several big investors, including the Federal Reserve Bank of New York, that it should buy back troubled mortgages because the loans were made improperly.
In its first response to the investor claims, Bank of America argued that the effort would have the effect of speeding up the foreclosure process and force it to evict more homeowners. The investors’ claims have become a major worry on Wall Street as the foreclosure crisis has escalated.
A group of investors, including the Federal Reserve Bank of New York and Pimco, the money management firm, is pressing Bank of America to buy back a portion of some $47 billion worth of mortgages. They argue that Countrywide, a unit of Bank of America, has not been servicing the mortgages correctly and that the loans did not conform to underwriting standards.
In a letter from its lawyers Thursday, Bank of America said the problems stemmed from the economic downturn rather than any underlying problem with how the mortgages were sold to investors. It called the investor claims “utterly baseless.”
Signaling a much more aggressive legal stance, the bank also criticized the lawyer behind the effort, Kathy D. Patrick. It argued that a letter she wrote last month that was signed by clients was “written for an improper purpose, or in furtherance of an ulterior agenda.” Ms. Patrick did not immediately respond to calls seeking comment.
http://www.nytimes.com/2010/11/05/busin ... .html?_r=1
