| NEW YORK
NEW YORK Bank of America Corp's Countrywide mortgage unit was hit with at least three new lawsuits accusing it of misleading investors about its finances and lending practices, and may face more by other investors who chose not to join a recent class-action settlement.
Wednesday's lawsuits by the states of Michigan and Oregon, and by Fresno County in California, were filed five days after Bank of America said it may incur an additional $6.1 billion of write-downs and legal costs tied primarily to Countrywide, which it bought in July 2008.
The lawsuits were among the first by the 33 investors that according to court records chose not to join last year's $624 million settlement to resolve similar class-action litigation against Countrywide and former auditor KPMG LLP.
A hearing to approve a modified, final version of that accord is set for February 25 in federal court in Los Angeles.
Shirley Norton, a Bank of America spokeswoman said in a statement: "It is unfortunate that select investors chose to opt out of a fair and equitable agreement to settle these issues. We intend to vigorously defend these claims."
Some investors choose to "opt out" of class-action settlements if they believe they can obtain higher recoveries by suing on their own.
Bank of America paid roughly $2.5 billion for Countrywide, which had been the largest U.S. mortgage lender.
It faces billions of dollars of potential costs from credit losses, and from litigation by investors who bought Countrywide stock or securities backed by Countrywide mortgages, many of which were risky subprime or adjustable-rate mortgages.
CALPERS, BLACKROCK, TIAA-CREF
The 33 investors that opted out of the $624 million settlement include several large state pension funds and asset managers such as the California Public Employees' Retirement System, BlackRock Inc and TIAA-CREF.
"Our clients represent some of the largest institutional investors in the country and in Countrywide securities, and are fully committed to recovering the substantial damages caused by the fraudulent conduct at Countrywide," said Blair Nicholas, a partner at Bernstein Litowitz Berger & Grossmann LLP who represents 16 opt-out investors including CalPERS, BlackRock,
Bernstein Litowitz filed a separate lawsuit on Monday in New York against Countrywide on behalf of TIAA-CREF, New York Life Insurance Co and other investors who said they were victims of a "massive fraud" when they bought mortgage-backed securities.
Bank of America is based in Charlotte, North Carolina.
ABANDONED FOR MARKET SHARE?
The Michigan and Fresno lawsuits accused Countrywide of having "repeatedly touted its prudent, conservative and risk-managed lending practices," while abandoning them in a drive for greater market share in a booming housing market that began to collapse four years ago.
Once losses began to mount, prices on Countrywide securities plummeted, causing losses of tens of millions of dollars for Michigan and millions of dollars for Fresno, the complaints said.
Nicole Lavallee, a partner at Berman DeValerio who represents Michigan and Fresno, declined to comment.
Oregon said it lost $14 million by investing in Countrywide, and might have netted just $500,000 had it participated in the class-action settlement.
"Oregon will not accept pennies on the dollar when Wall Street defrauds Oregonians," Attorney General John Kroger said in a statement.
The Michigan and Fresno lawsuits also name underwriters and former Countrywide officials as defendants, including Countrywide's longtime Chief Executive Angelo Mozilo.
David Siegel, a lawyer for Mozilo, was not available for comment.
Mozilo agreed in October to a $67.5 million settlement of a U.S. Securities and Exchange Commission civil fraud lawsuit accusing him of misleading investors.
The cases are State Treasurer of the State of Michigan v. Countrywide Financial Corp et al, U.S. District Court, Central District of California, No. 11-00809; Fresno County Employees' Retirement Association v. Countrywide Financial Corp et al in the same court, No. 11-00811; and Oregon v. Countrywide Financial Corp, Oregon Circuit Court, County of Multnomah, Nos. 1101-01141 and 1101-01142.
(Reporting by Jonathan Stempel; Additional reporting by Dan Levine in San Francisco; Editing by Steve Orlofsky)