BofA Facing Doom By Countrywide Ticking Time Bomb?

Attorney Abigail Field writes in AOL's Daily Finance:

• Testimony in a New Jersey foreclosure case decided last week may spell big trouble for Bank of America. If what one bank employee said on the stand proves to be accurate, paperwork problems it acquired when it purchased the failing mortgage provider Countrywide in 2008 could leave BofA on the hook for billions of dollars.

• As first reported by Kate Berry for American Banker, Linda DiMartini, a supervisor and operational team leader for the Litigation Management Department of BAC Home Loans Servicing, testified in the foreclosure case of John T. Kemp that it was "customary for Countrywide to maintain possession of the original note and related documents."(1)

• If that's true, then Bank of America may discover that it has millions of loans on its books that it thought it had transferred to trusts that issued mortgage backed securities, because 96% of Countrywide loans were ostensibly securitized. As the Congressional Oversight Panel explained, that outcome alone could cause massive damage to a bank's balance sheet. And as bad as that would be, it isn't the only problem that could result from Countrywide hanging on to the notes.

For more, see Countrywide's Mortgage Document Errors May Doom Bank of America.

For the court ruling, see Kemp v. Countrywide Home Loans, Inc.

(1) Go here for the transcript of court hearing in which BofA's attorney conceded that DiMartini's testimony was accurate and that as a result, BofA had failed to deliver the note at issue in that case to the trust under the contract or otherwise applicable law.