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CNBCThe New York Federal Reserve Bank is part of a consortium of eight large institutional investment firms that is suing Bank of America over failures related to mortgage securities, CNBC confirmed Tuesday.
Bloomberg reported earlier Tuesday that the New York Fed had joined with the Pacific Investment Management Company, better known as Pimco, and investment management firm BlackRock in an attempt to force BofA to buy back $47 billion in mortgage bonds.
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A law firm on Tuesday filed a suit alleging failures by Countrywide Financial at properly servicing loans that were part of certain mortgage-backed securities. Countrywide was acquired by Bank of America in 2008.
"We want to enforce the holders' contract rights," Kathy Patrick, the lead attorney representing the bond holders, told CNBC. "Today's action begins the clock ticking ... If these issues of non-performance are not addressed and cured, then our clients will be able to enforce their rights in court."
"There were representations made to my bond holders when they purchased these securities. They are contractual representations about the credit quality of these mortgages. "And my clients are concerned," Patrick said, "that the mortgages in question did not, at the time they were securitized, conform to those representations."
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