Investors sue BoA after predatory lending case

A group of bond investors has sued Bank of America (BoA)-owned Countrywide Financial, demanding Countrywide purchase every mortgage loan for which it agrees to reduce payments under a predatory lending settlement deal.

Under an agreement in October with 15 state attorneys general, Countrywide, USA's biggest mortgage lender before BoA bought it for $2.5bn, will modify mortgages for about 400,000 homeowners to settle allegations of predatory lending, Reuters reports.

Lawyers for the plaintiffs claim Countrywide and its parent would be liable to pay hundreds of trusts a total of $US80bn for the loans it modifies.

'Countrywide believes that plaintiffs' lawsuit represents an unlawful effort to assert rights of the trusts,' BoA said. 'Accordingly, Countrywide intends to pursue plaintiffs for any and all remedies available to it, including the recovery of its costs incurred in having to defend this improper action.'