By Al Yoon
NEW YORK, Dec 8 (Reuters) - A fund representing bond investors seeking to force Bank of America-owned Countrywide Financial to repurchase thousands of mortgages failed to satisfy requirements to sue under contracts governing the securities, according to Countrywide attorneys.
John Beisner, a laywer at O'Melveny & Myers LLP, in a Dec. 8 letter asserted Greenwich Financial Services 'lacks standing to sue' under contracts that limit lawsuits unless conditions are met, including that 25 percent of bondholders request such litigation.
While Greenwich Financial 'purports' to bring a class action, there is 'no class action exception to its very clear requirements, and class action procedures do not excuse litigants from satisfying contractual requirements,' Beisner wrote in the letter, obtained by Reuters.
Beisner urged Greenwich counsel Grais & Ellsworth LLP to withdraw the suit which demands that Countrywide buy every mortgage loan for which it agrees to modify, or reduce payments under a predatory lending settlement deal. David Grais declined to comment on the letter.
Countrywide and its Bank of America parent would be liable to pay hundreds of trusts a total of about $80 billion for loans it modifies, according to lawyers of the plaintiffs.
Countrywide, the nation's biggest lender as the mortgage crisis hit, agreed in October to modify mortgages for about 400,000 homeowners to settle allegations of predatory lending. Countrywide was bought by Bank of America in July.
Regulators and lawmakers are pushing loan modifications as a key way to halt foreclosures that have put U.S. housing in a downward spiral and the nation's economy into recession. But modifications, which may include lowering interest rates or forgiving some principal, have fueled controversy since many loans are contained in mortgage securities owned by investors with differing agendas.
The lawsuit was filed on behalf of Greenwich Financial Services Distressed Mortgage Fund 3 LLC and QED LLC.
Buying every loan earmarked for for modification would halt the process that keeps homeowners in their homes, and increases the value to investors since losses under a foreclosure can be much deeper, Beisner said.
'Whatever may be motivating the lawsuit, your legal theory is wrong; Countrwide has authority to make the planned modifications, and it intends to do so,' he said.
(Additional reporting by Patrick Rucker and Grant McCool) Keywords: COUNTRYWIDE LAWSUIT/GREENWICH (albert.yoon@thomsonreuters.com; +1 646-223-6347; Reuters Messaging: albert.yoon.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2008. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
NEW YORK, Dec 8 (Reuters) - A fund representing bond investors seeking to force Bank of America-owned Countrywide Financial to repurchase thousands of mortgages failed to satisfy requirements to sue under contracts governing the securities, according to Countrywide attorneys.
John Beisner, a laywer at O'Melveny & Myers LLP, in a Dec. 8 letter asserted Greenwich Financial Services 'lacks standing to sue' under contracts that limit lawsuits unless conditions are met, including that 25 percent of bondholders request such litigation.
While Greenwich Financial 'purports' to bring a class action, there is 'no class action exception to its very clear requirements, and class action procedures do not excuse litigants from satisfying contractual requirements,' Beisner wrote in the letter, obtained by Reuters.
Beisner urged Greenwich counsel Grais & Ellsworth LLP to withdraw the suit which demands that Countrywide buy every mortgage loan for which it agrees to modify, or reduce payments under a predatory lending settlement deal. David Grais declined to comment on the letter.
Countrywide and its Bank of America parent would be liable to pay hundreds of trusts a total of about $80 billion for loans it modifies, according to lawyers of the plaintiffs.
Countrywide, the nation's biggest lender as the mortgage crisis hit, agreed in October to modify mortgages for about 400,000 homeowners to settle allegations of predatory lending. Countrywide was bought by Bank of America in July.
Regulators and lawmakers are pushing loan modifications as a key way to halt foreclosures that have put U.S. housing in a downward spiral and the nation's economy into recession. But modifications, which may include lowering interest rates or forgiving some principal, have fueled controversy since many loans are contained in mortgage securities owned by investors with differing agendas.
The lawsuit was filed on behalf of Greenwich Financial Services Distressed Mortgage Fund 3 LLC and QED LLC.
Buying every loan earmarked for for modification would halt the process that keeps homeowners in their homes, and increases the value to investors since losses under a foreclosure can be much deeper, Beisner said.
'Whatever may be motivating the lawsuit, your legal theory is wrong; Countrwide has authority to make the planned modifications, and it intends to do so,' he said.
(Additional reporting by Patrick Rucker and Grant McCool) Keywords: COUNTRYWIDE LAWSUIT/GREENWICH (albert.yoon@thomsonreuters.com; +1 646-223-6347; Reuters Messaging: albert.yoon.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2008. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.