Countrywide, Bank Of America Face Possible Lawsuits From Investors Over $8.4B Loan Modification Settlement

The Charlotte Observer reports:

• Countrywide Financial Corp.'s agreement last month, which requires it to relax the terms of some 400,000 mortgages, was good news for struggling homeowners. But a New York law firm says the settlement(1) isn't fair to the people who invested in Countrywide's mortgage-backed securities, and it's trying to drum up interest in challenging the settlement.

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• The law firm, Grais & Ellsworth, will hold a meeting this morning in New York for securities investors interested in taking legal action against Countrywide and its parent, Charlotte's Bank of America Corp.

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• Grais & Ellsworth may challenge the settlement because it says Countrywide is violating its agreements with securities investors. According to the law firm, those agreements require Countrywide to repurchase any loans that it modifies or any loans that violate standards on predatory lending. Countrywide has not said that its loans were unlawful.

For more, see Investors might fight settlement (Loan workouts hurt the investors who bought Countrywide's securities, New York law firm says).

(1) Last month, Bank of America settled the litigation by agreeing to $8.4 billion worth of mortgage modifications with measures such as reducing interest rates or waiving late fees. MortgageServicingIssuesAlpha