Oregon Joins Class Action Suit and Bank of America Agrees to Pay $500M to Settle Litigation

(Source: Attorney General Ellen Rosenblum) - SALEM – Oregon Treasurer Ted Wheeler and Attorney General Ellen Rosenblum today announced that Bank of America will pay $500 million to settle lawsuits by investors nationwide, including the Oregon Public Employees Retirement Fund, against Countrywide Financial Corp.

Countrywide, which was acquired by Bank of America in 2008, misled investors into buying risky mortgage-backed securities prior to the worldwide market crash in the 2000s.

The deceit ultimately cost Oregon: The Oregon pension fund was induced to invest $200 million into home loans originated by Countrywide, and lost $29 million as a result of misrepresentations by Countrywide and its financial underwriters, the lawsuit said.

“Oregon is taking a stand against financial firms that didn’t tell us the whole truth about what they were selling,” said Treasurer Wheeler. “These practices didn’t just hurt beneficiaries of Oregon trust funds. The actions by mortgage firms also hurt families dearly and directly contributed to an avalanche of foreclosures.”

“The entire country paid a dear price for Countrywide’s and much of the financial industry’s aggressive risk-taking,” Rosenblum said. “This settlement is one small step toward obtaining some justice for the thousands of lives disrupted by the housing bust and economic crash.”

The typical recovery in securities class action cases is 10 cents on the dollar, though the state and its attorneys hope they can exceed that threshold in negotiations. The exact Oregon share of the national $500 million settlement won’t be known for potentially months.

Oregon joined with the Maine pension fund on the lawsuit, which was filed in California and accused Countrywide of violating securities law by making statements to investors that were materially false and misleading because they misrepresented and/or failed to disclose information crucial to investors’ ability to accurately assess the risks of their investments.

According to the lawsuit, from 2005 through 2007, Countrywide was the nation’s largest residential mortgage lender originating in excess of $850 billion in home loans throughout the United States in 2005 and 2006 alone.

The lawsuit alleged that Countrywide’s ability to originate residential mortgages on such a massive scale was facilitated, in large part, by its ability to rapidly package -- or “securitize” -- those loans and then, through the activities of the underwriter defendants, sell them to investors as purportedly investment grade mortgage-backed securities.

The suit says that Countrywide provided documents that falsely claimed that all the mortgage loans held in the investment fund met accepted underwriting standards for evaluating prospective buyers’ credit history and ability to repay the loan.

Countrywide also falsely claimed that its appraisals met acceptable standards designed to insure that the value of the property was adequate collateral for the mortgage, the lawsuit said.

The Oregon State Treasury protects public assets and saves Oregonians money through its investment, banking, and debt management functions. State investment policies are overseen by the Oregon Investment Council. The State Treasury also promotes public outreach and education to help Oregonians learn strategies to save money, invest for college and make smart financial choices. You can track Treasury-related news on Twitter at @OregonTreasury.

The Oregon Department of Justice is the state’s law firm. Its Consumer Protection and Financial Fraud section has played an integral role in combatting the worst excesses of the financial industry that led up to the economic crash. Oregon served as a lead plaintiff in the litigation along with Maine and several other states.

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Moe Bedard
Founder at LoanSafe.org
My name is Maurice "Moe" Bedard. I am the founder of America's #1 Mortgage Forum, LoanSafe.org. My online work has been featured in the New York Times, LA Times, Fox Business, and many other media publications. I currently live in Carlsbad, California with my beautiful wife and children.
  • Nikki

    To Whom It May Concern:
    Beginning in August 1st 2011, we missed a payment due to the economy and layoffs and our home loan institution Bank of America began sending us packets indicating we could be eligible for various program to prevent losing our home. On September 2 2011, we received a letter stating “Notice of intent to accelerate” and we were to pay the two payments behind @ $2,989.42 in addition the letter indicated that if we did not comply foreclosure proceedings may begin. The next package we received was dated September 28th 2011. This package stated we had to have our information turned in before October 28th 2011 we received the package on October 30th 2011 we faxed all the information to her on October 31st stating when we received the packet. On November 14th 2011 we received a letter stating that our single point of contact is Seneca Boyd-Tan, the letter includes that she will work with us to review our individual situation and decide which programs work best for our situation. On December 14th and 15th we received a letter from Titanium Solutions stating that “they will be sending a representative from Titanium Solutions Inc to collect the documents that will help with the review process” I called Titanium Solutions and they had not record of anyone scheduled to come to collect documents. (Please note that we received packages every other day for months from Bank of America stating the same information over and over again, and I do have proof of this claim)
    January 31st we received another packet stating, “They had reviewed our request for the modification loan and we were declined because we did not send the documents they asked for” In this letter it also suggested that to avoid negative consequences on our credit we could do a short sale or a deed in lieu. To comply with Bank of America we attempted a short sale with Area Properties May 15th 2012, Selling price at $95,000, and no interested parties.
    On March 15th 2012, we received a letter from Bank of America stating “ In accordance with the terms of your home loan agreement, your property has begun foreclosure proceedings)
    As of April 2nd 2012 we started getting notices of trustee deed of sale, in addition to a letter stating that “our lender has decided to sell our property because the money due on our mortgage has not been paid” Company name: Recontrust Company, N.A. again we received multiple letters stating the same information about every other day. On April 17th 2012 we received another letter stating “In order to proceed with you cooperative short sale, please return this form no later than May 4th 2012”, and we did so.
    On June 7th 2012, and on July 12th we received a letter from Bank of America stating “We are reviewing the loan modification process however we need additional information, this program is introduced by the U.S. Department of Justice and the State Attorneys General Global settlement.” (Please note the information requested was the same from the beginning and I indeed have proof of fax correspondence)
    On August 3rd 2012, we received a letter from Bank of America stating that “our request was not received in time to complete a review prior to the foreclosure sale, consequently the foreclosure will proceed as scheduled”
    August 10th 2012, we received a letter from Bank of America stating “we have been approved to start a trial period plan for the new modification program as a result of the U.S, Department of Justice and State Attorneys General global settlement”
    The offer is as follows: “This modification program includes significant principal reduction and an affordable monthly payment. If you complete this trial period plan by making all of the payments as outlined below, any past due late fees will be waved, interest and advances that we paid on your behalf will be added to your principal balance, and your loan will be brought up to date. We will then permanently reduce your principle balance by the amount of $83,884.16* in addition we will reduce your interest rate to 2.0%”
    The period plan is as follows:
    1. September 3rd 2012 $566.33
    2. October 3rd 2012 $566.33
    3. November 3rd 2012 $566.33
    I began my payments on September 6th 2012 and every month thereafter on the third of every month, complying with the agreement. The letter also stated that if we complied to the agreement our final documents would arrive by the end of November 2012 and the agreement would be settled; moreover 3 copies of the permanent documents would be provided.
    On November 13th 2012 we received ONE copy of a TRIAL modification agreement, we were to sign and date and return which we did; Then on January 8th 2013 we received another modification letter stating: “As the date of this letter we have not received your signed modification documents, (we sent them back on November 14th 2012). “We want to ensure that you are aware of this offer for a permanent loan modification and have an opportunity to accept it, we would like to remind you that a payment modification under this program would provide you with principal reduction in the amount of $88,828.59 and a low monthly payment of $607.67”. This is not what the first offer was and they wanted documents signed and returned, there were no packets to sign”
    Through this entire process I kept in contact with Bank of America weekly, and I heard the same thing over and over again it is in the system, or some would reply it is not in the system, please also note :these are the multiple representatives and this is just the ones I can recall off the top of my head.
    1. Stacy Mcisaac
    2. Mary Eagle
    3. Lamurial Burns
    4. Belinda Castor
    5. Paul Viggiani
    Due to my frustrations and incompetency of Bank of America I filed a complaint with the BBB on February 26th 2012, March 1st 2013, I received a letter from Paul Viggiani, he wrote the letter stating that he went through our case and showed inconsistencies of what my complaint is. I told him I would gladly provide proof of the correspondence that he stated we did not comply.
    Mr. Viggiani, has worked tirelessly on my case and every time he approaches the closing department they tell him to wait and that it is in escalation, we speak weekly and he has been the best representative I have dealt with. However, I am sick of the incompetence of Bank of America and the lack of concern for their customers.
    I am on disability for severe anxiety, post traumatic disorder, bi-polar 1, this situation that has been occurring going on two years has hospitalized me and caused me to up my medication doses to ridiculous amounts, I also have medical records to prove this as well. Mentally I cannot take anymore and I am seriously considering an attorney for emotional, mental damages. This may sound Ludacris however, I want Bank of America to write off my loan, I only make $776.00 a month, and I have a payment of $566.33. I am grateful for the lower price however in the end I am still paying for the entire loan that this house and I quote from a Bank of America appraiser “this house isn’t even worth $40,000, I cannot keep going through this, and I will not lose my home because of a banks incompetency.
    Please resolve this issue, I feel as though Bank of America is money hungry because they cannot manage the people’s money and needed a bail out it is sickening how many houses are vacant because of bail outs and foreclosure happy irresponsible banks. Moreover It makes me sick that the presidents of these banks are sitting pretty while people like me suffer from fear that our homes will be taken. It is now May 20, 2013 I received a letter stating that I owed an additional 738.60 on my payment from February 2013 because my payments are $1,453.79 a month and I owe $22,506.04, and this is the amount I need to pay in full or foreclosure proceedings will begin; I have Two filing cabinets full of documentation from Bank Of America, proof of our cooperation with everything they have put me through and I now yet have another account manager and Friday may 16 2013 I received a letter stating I have another case manager. My Modification loan has been in “ Escalation” now for oh about 5 months and I keep getting the same story that they are told by the closing department just wait. Again our Final Modification loan papers were to be delivered by November 30th 2012. And yet still no closure. I have made complaints to the Attorney General, Federal Reserve consumer help and three additional complaints to BBB. NOTHING HAS BEEN DONE IN MY BEHAF!
    I am now currently seeking legal advice from Social Security Disability and seeking other attorneys that will help me with this since no one else seems to care.
    I want my loan paid in full or excused and or compensation for mental anguish. It may seem silly to ask for such a thing however I have suffered from the beginning of this fight. My mental health is completely airy and I have medical records to prove the damage this is causing. I want Bank of America to not offer some ludicrous offer and not stand behind the offer as they have done so up to now. Bank of America is incompetent and cruel