Banking, finance, and taxes
Justice Department and SEC: BofA Fraud in Mortgage-Backed Securities
Published:
Bank of America Corporation (NYSE: BAC) has yet another new lawsuit based upon the housing implosion and mortgage fraud. The Justice Department and the Securities and Exchange Commission filed parallel lawsuits in a US District Court in Charlotte on Tuesday. The accusation is fraud involving $850 million in residential mortgage-backed securities going back to 2008.
Bank of America’s response to the suits indicated that these were actually prime mortgages sold to sophisticated investors who had access to data to analyze what they were buying. BofA Also said that the loans in this portfolio performed better then many securities with the same timing and characteristics of packages put together by its competitors.
The SEC charge said,
The SEC alleges that Bank of America failed to tell investors that more than 70 percent of the mortgages backing the offering – called BOAMS 2008-A – originated through the bank’s “wholesale” channel of mortgage brokers unaffiliated with Bank of America entities. Bank of America knew that such wholesale channel loans – described by Bank of America’s then-CEO as “toxic waste” – presented vastly greater risks of severe delinquencies, early defaults, underwriting defects, and prepayment… Bank of America never disclosed this material information to all investors and never filed it publicly as required under the federal securities laws.
Today’s lawsuit is a civil action, and not criminal. It is one of many suits against the bank, and by now we have known over and over only to assume that more suits by one or more of the agencies is likely headed its way. This action involves the $855 million residential mortgage-backed securities in 2008 called “BOAMS 2008-A.” The SEC’s charge says that this pool was offered and sold as a prime securitization appropriate for the most conservative RMBS investors.
Bank of America shares closed down 1.1% at $14.65 on Tuesday against a 52-week range of $7.57 to $15.03,
Essential Tips for Investing (Sponsored)
A financial advisor can help you understand the advantages and disadvantages of investment properties. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
Investing in real estate can diversify your portfolio. But expanding your horizons may add additional costs. If you’re an investor looking to minimize expenses, consider checking out online brokerages. They often offer low investment fees, helping you maximize your profit.
Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.
Latest from 24/7
