Bank of America delays mortgage investor action
NEW YORK (Reuters) - Bank of America Corp (BAC.N) on Wednesday said investors delayed a technical default on the bank over its mortgage servicing unit, allowing more time for talks about alleged contract violations.
The investors, which include bond giant Pacific Investment Management Co. and BlackRock Inc., in October issued a notice of nonperformance to Bank of America, saying the bank failed to properly handle loans packaged into $16.5 billion of bonds.
The investors, through lawyer Kathy Patrick, said that some faulty mortgages should never have been included in the bonds in the first place, and that the servicing unit, Countrywide Home Loan Servicing, should force the original lender to repurchase them at face value.
The investor notice in October gave Countrywide 60 days to fix the problems before they declared "an event of default," -- a technical violation of the terms of the bond, Kathy Patrick, a partner at Gibbs & Bruns LLP representing the investors, said in October. After an event of default, investors can sue.
The bank has said it isn't responsible for poor loan performance, and that it would fight the investors.
Countrywide Home Loan Servicing, now part of Bank of America, works on behalf of mortgage bond holders to collect payments on mortgages and work out bad loans.
(Reporting by Al Yoon; Editing by Kenneth Barry)