Another major bank facing litigation over misrepresentations tied to mortgage bonds sold to Fannie Mae and Freddie Mac lost its chance to have the case completely dismissed by a judge.
The FHFA sued Bank of America-Merrill Lynch ($9.28 -0.115%) and 16 other major financial firms this past year, claiming various allegations of fraud on the grounds that the firms sold residential-mortgage backed securities to the GSEs and misrepresented the quality of the loans.
U.S. District Judge Denise Cote out of New York granted Bank of America-Merrill Lynch’s push to dismiss claims of fraud tied to representations made about the borrowers owner-occupancy status and LTV ratios, but kept the main parts of the case alive.
Her ruling mirrors a similar decision this week in which Judge Cote kept the FHFA’s case against JPMorgan Chase ($41.03 0.625%) alive.
The judge’s opinion allows the case to go forward with other fraud claims permitted to survive.
Judge Cote wrote: “As in Chase, the facts alleged in the amended complaint are sufficient to plead fraud with respect to the offering materials’ representations regarding mortgage-underwriting standards.”
Source: Housingwire