Bank of America lost a bid May 29 to shake claims brought by the trustee for a $1.75 billion mortgage-backed securities deal, although Manhattan Supreme Court Justice Eileen Bransten (See Profile), in U.S. Bank v. Countrywide Home Loans, 652388/2011, narrowed the case to just a fraction of the loans at issue. She ruled that MBS trustee U.S. Bank National Association can’t try to force BofA to repurchase all 4,484 loans underlying the securities, since the terms of the securitization deal don’t allow for such a "pool-wide" breach of contract claim. Bransten refused, however, to dismiss a separate breach of contract claim related to 495 allegedly faulty loans that BofA unit Countrywide Financial already refused to buy back.
U.S. Bank’s lawyers at Kasowitz, Benson, Torres & Friedman sued BofA and Countrywide in 2011, alleging that investors in HarborView Mortgage Loan Trust 2005-10 had examined 786 under-performing loans and determined that about 66 percent of them didn’t live up to Countrywide’s promises about their quality. The trustee brought two breach of contract claimsone demanding that BofA repurchase the non-performing loans it identified, and another asking the bank to repurchase the entire loan pool due to "pervasive breaches" of Countrywide’s representations and warranties. BofA and Countrywide moved to dismiss both claims in May 2012, arguing that the lawsuit was a thinly veiled ploy by vulture funds to cash in on mortgage-backed investments acquired on the cheap.
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