Various lawsuits have been lodged by investors against Bank of America (BofA) over mortgage-backed securities or MBS and the suits could involve at least $ 54 billion worth of investments. Investors are alleging that BofA have sold unwarranted MBS home loans.
Earlier, BofA had estimated more than $ 375 billion worth of securities in its regulatory filing but retracted and cut the figures following a California court ruling.
The suits are still part of the investors’ efforts to compel US banks to repurchase billions of mortgage-backed securities that banks have sold to them.
The number of MBS at issue in a possible class suit had been limited by a California court which ruled that the number should be lowered from $ 352 billion to $ 31 billion.
Courts are being asked by investors to certify their suits against the alleged misrepresentations and faulty warranties that banks have made in its MBS sales transactions.
Bank of America said that aside from repurchase demands, investors are also asking the courts to grant them unspecific compensatory damages. But it also said that the amount involved could be lower since there are still a number of factors that need to be considered such as mortgage repayments, collaterals and partial payments already made by the borrowers.
The company also said that it has already put into place new standards that would dispel any more doubt about the integrity of its foreclosure process. But the same standards could also increase foreclosure costs. It can be recalled that BofA had implemented a foreclosure freeze in all 50 states after the banks foreclosure procedures have been put under investigation by state and federal regulators. But the bank has already since resumed foreclosure documents in 23 states while maintaining the moratorium on the rest.
The bank also fears that new foreclosure system could result in higher fees, including legal and servicing dues. It also expressed its concerns that the probe could put completed foreclosures under tighter scrutiny and impose additional regulations on them.
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