Countrywide is both an albatross and a boon for Brian Moynihan. Sure, it’s the reason for all of Bank of America’s troubles, but it’s also really convenient to have such a reason.
This, however, is less convenient:
According to new documents filed in state Supreme Court in Manhattan late on Friday, questionable practices by the bank’s loan servicing unit have continued well after the Countrywide acquisition; they paint a picture of a bank that continued to put its own interests ahead of investors as it modified troubled mortgages….
One example shows investors suffering a loss of more than $300,000 on a $575,000 loan made in 2006. In May 2010, Bank of America reduced the principal owed on a first mortgage to $282,000, but at the same time, real estate records showed, Bank of America’s $110,000 home equity line of credit on the property remained intact and unmodified.
BriMoy took the reins at BAC in January 2010. And if some Federal Home Loan Banks and Triaxx get their way, moves like the aforementioned will cost him, big time.
They contend that a proposed $8.5 billion settlement that Bank of America struck in 2011 to resolve claims over Countrywide’s mortgage abuses is far too low and shortchanges thousands of ordinary investors.
The filing raises new questions about whether a judge will approve the settlement. If it is denied, the bank would face steeper legal obligations.
Fresh Questions Over a Bank of America Settlement [NYT]