The mortgage-backed securities saga is far from over. A fresh suit has been filed in federal court in Manhattan by Allstate Corporation (NYSE: ALL) against originator Countrywide Financial Corporation. The Countrywide suit of course means that Allstate is going after Bank of America Corporation (NYSE: BAC) and the sum is a pretty amazing one.
The suit covers some $700+ million in mortgage-backed securities which Allstate had invested in and it names Countrywide executives including Angelo Mozilo as defendants.
Allstate is not alone as being the only insurer or financial institution claiming that the securities they invested in were not what was represented. Countrywide is also not the only firm that has been sued for its mortgage origination, but it is now the post-child of mortgage fraud lawsuits over underwriting standards, data verification, disclosures, mortgage terms and more.
Mozilo has already agreed to pay some $67.5 million out in the form of penalties in order to settle civil charges and possible insider trading charges that took place during the housing bubble and the mortgage meltdown which followed.
What is still far from being known is just how much of a put-back could come down the line, and it is still unknown if Bank of America will be able to just write a check to settle these cases in the coming months and years. Some of these cases may linger on and on. Consider all of this in the early stages of the lawsuits of this form, and go ahead and consider it work in progress.
JON C. OGG
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