Bank of America Corp’s Countrywide mortgage unit has been sued by investors claiming they were victimized in a “massive fraud” when they bought mortgage-backed securities.
The lawsuit was filed on Monday in a New York state court by 12 plaintiffs including the TIAA-CREF fund family, New York Life Insurance Co and Dexia Holdings Inc.
According to the complaint, the investors bought hundreds of millions of dollars of Countrywide securities from 2005 to 2007 that they thought were “conservative, low-risk investments.”
The investors said Countrywide misrepresented the securities’ safety in offering documents and elsewhere, and compromised their investments by ignoring its underwriting guidelines.
As a result, the complaint said, most of the securities now carry “junk” credit ratings rather than the “triple-A” ratings they once had, resulting in “significant losses.”
The plaintiffs want compensatory and punitive damages.by