This is gonna hurt..Bank of America that is.

A group of Investors for BofA are highly pissed and to that end, they sued Bank of America. From Jurist:

Twelve plaintiffs on Monday combined to file a lawsuit [complaint, PDF] in the New York State Supreme Court [official website] against Countrywide Financial Corporation[NYT backgrounder] alleging widespread fraud that resulted in substantial financial losses. The plaintiffs invested hundreds of millions of dollars with the Bank of America (BOA) [corporate website] subsidiary between 2005 and 2007, believing the purchases of mortgage-backed securities to be "conservative, low-risk investments." The suit claims that Countrywide "recklessly" misrepresented the stability of the investments and failed to adhere to its stated underwriting and credit analysis procedures, leading the credit ratings of many of the securities to fall significantly. The complaint also names several former Countrywide executives as defendants, and seeks compensatory and punitive damages.

Countrywide founder in deep doo-doo with the SEC

Angelo Mozilo has been charged with fraud, leveled by the SEC with regard to Countrywide's subprime loans.From MSNBC:

Federal regulators on Thursday charged Angelo Mozilo, the former chief executive of mortgage lender Countrywide Financial Corp., and two other company executives with civil fraud.

The Securities and Exchange Commission’s civil lawsuit, filed in federal district court in Los Angeles, also accuses Mozilo of illegal insider trading.

*snip*

Civil fraud charges also were filed against Countrywide’s former chief operating officer David Sambol, 49, and ex-chief financial officer Eric Sieracki, 52.

The trio “deliberately misled” Countrywide shareholders, SEC enforcement director Robert Khuzami said at a news conference at agency headquarters. While they painted a picture of robust performance, the real Countrywide was “buckling under the weight” of soured mortgage loans, he added.

Countrywide started our trip down the road to depression when they took the first dump.

I hope to hell Angelo does jail time..but I ain't holding my breath that the over tanned bag of shit does any time in jail. I would feel much better if the FBI charged this fuckwit. Angelo knew Countrywide was taking a shit but sold his shares for over $140 million dollars before they fell from grace. Again, from the MSNBC writeup:

The SEC is seeking injunctions and unspecified civil fines against Mozilo, Sambol and Sieracki and wants them to be barred from serving as officers or directors of any public company. The agency also is seeking unspecified restitution of allegedly ill-gotten profits from Mozilo and Sambol.

Fry those bastards..please.

B of A buys Countrywide..

In a deal that saves the ass of the nation's largest mortgage lender, Bank of America has agreed to buy Countrywide in a 'stock-only' sale. Countrywide has been rumored to of been considering a Chapter 11 filing recently with the value of their stock at a garbage rate of $5 a share in December. "As of Sept. 30, Countrywide's savings bank held about $79.5 billion of loans as investments. Three-quarters of these loans were second-lien home-equity loans -- where Countrywide doesn't have first crack at the collateral in case of default"-according to the Wall Street Journal.

The WSJ has a nice explanation of what it all means here. The person who makes out like the bandit he is in this deal?

Why, the founder of Countrywide of course. Chief Executive Angelo Mozilo. Angelo might be taking home a nice little golden parachute of..wait for it...

$70 million bucks

Yep, that ain't a typo folks. Meanwhile the stockholders will get: 0.1822 shares of Bank of America for each share of Countrywide. Yes, that is a big fat fucking zero in front of that decimal point. Sure, they now will own stock in the largest bank in the US, but damn, that trade-off sure doesn't look real inviting does it? Bank of America gets a company that was valued at one time the amount of $24 Billion, and they got it for the bargain basement price of $4 Billion.

Oh, and Angelo will also get his countryclub dues paid through the year 2011 and get to use the corporate jet. Chuck Shumer had this to say about Angelo's sweet deal:

"Mr. Mozilo could display some good will by donating any severance pay he stands to receive to the nonprofit housing counselors trying to prevent foreclosures,"

Somehow, I doubt that will happen Chuckie..

Countrywide Mortgage has problems..to put it mildly.

A day after the news broke that Countrywide Mortgage was having a bit of "financial problems"..customers lined up by the hundreds to yank their money out of the banking end of the corporation.

Countrywide Financial tried to assuage the worry and fear that they were going under. They are the biggest mortgage company in the nation, but they also were loaning money to folks that could not afford the homes they were buying. From an LAT writeup:

The parent firm borrowed $11.5 billion Thursday by using up an existing line of credit from 40 banks, saying the money would help the lender meet its funding needs and continue to grow. But stock investors, apparently alarmed that the company felt compelled to use the credit line, sent Countrywide's already battered stock down an additional 11%.

That doesn't send a warm and fuzzy message to Wall St. does it? Nor does it send a good message to their customers..the LAST folks they need storming the doors to withdraw their hard-earned cash. Some branches actually ran out of cash and customers were forced to leave their names and get on a list to withdraw their funds.

But, if you listen to Wall St and those wonderful folks in high finance..the housing market problem is just a little blip on the screen..right pal..shades of the Great Depression to me. Countrywide was playing fast and loose with the loans it was making..like many of the Mortgage brokers..as witnessed by this tidbit from the LAT writeup:

Countrywide recently was funding about $40 billion a month in mortgages. Of those, about half qualified to be sold to Freddie Mac or Fannie Mae, and half were "nonconforming" loans the agencies don't buy, including sub-prime mortgages to higher-risk borrowers as well as jumbo loans, which account for 43% of all mortgages issued in Southern California.--Sub-prime is code for a shaky loan evidently.

tags: Countrywide Financial, mortgage industry, housing market








EDIT: If you want to know how bad off Countrywide is..here is a comment from a fellow blogger that I want everyone to see from my comments section: "Countrywide has my mortgage and it has nearly doubled in amount since last year which is why I'm trying to sell my house. No, it's not an ARM nor have I refinanced the loan or been late on any payments--in fact before it went up so drastically I was paying extra against the principle. They didn't pay my escrowed insurance, either, which I had to pay out-of-pocket to be reimbursed in June. Have I seen the reimbursement yet? Ha ha, good one! There's a website with hundreds of complaints about CW called "Countrywide Sucks" or something like that. A class action suit was mentioned on the site but I don't think there is one, yet."--Thats fucked up and I hope to God they all sue.