Countrywide Plaintiffs Include Borrowers, Investors, Shareholders
Countrywide Financial Corp. general counsel Sandor Samuels has his work cut out for him.
Samuels also serves as Countrywide’s litigation chief and “he’s facing huge lawsuits on all fronts” arising from its subprime problems, Corporate Counsel reports. In the third quarter of 2007 alone, expenses for legal, accounting and consulting cost the company $52.4 million, according to reports filed with the Securities and Exchange Commission. During the same period the year before, the amount was $47.3 million.
But Samuels and his company will be getting some help under a planned $4 billion buyout by Bank of America announced in January. Bank of America will assume Countrywide’s legal liabilities. “We are aware of the claims and potential claims against the company and have factored these into the purchase,” bank spokesman Scott Silvestri told the legal publication.
The claims relate to a subprime meltdown that struck Countrywide particularly hard. During the third quarter last year, one-fourth of its subprime loans were delinquent, up from 17 percent in 2006, helping spur a $1.2 billion loss, the story says.
The article summarizes this “sampling” of outstanding cases:
–Five combined class actions in Los Angeles federal court by plaintiffs who bought mortgage-backed securities. The suit contends Countrywide and underwriters misled investors about the quality of the securities and that Countrywide made statements hiding increasing loan delinquencies.
–A class action filed by Countrywide employees in California federal court. They contend they lost money in their 401(k) plan because executives hid Countrywide’s gloomy financial picture.
–Shareholders’ derivative suits in Delaware federal court that claim the board of directors overpaid CEO Angelo Mozilo and hid the true amount of his compensation.
–A class action filed on behalf of borrowers in Los Angeles federal court. The suit claims Countrywide lured “unwary borrowers” into suprime mortgages even though they qualified for better loan terms.