Wednesday, August 17, 2011

California court allows for consolidation of Countrywide MBS lawsuits


Countrywide Financial Corp. obtained a judicial panel's permission to consolidate eight mortgage-backed securities lawsuits filed against the former subprime lender into one case in the Central District of California.

All of the actions deal with similar allegations, with the plaintiffs claiming Countrywide, which is now part of Bank of America (BAC: 7.4488 -4.01%), misrepresented the origination practices on mortgages backing subprime securities issued in 2004 to 2007.

The United States Judicial Panel on Multidistrict Litigation ordered the eight actions combined into one case before Judge Pfaelzer in the Central District of California.

In a separate order, The Bank of New York Mellon (BK: 20.80 -0.43%), which served as trustee in many of the transactions in question, obtained permission to have the claims against it separated and remanded to the Northern District of Illinois.

The California judicial panel narrowed the focus of the consolidated cases to actions brought by investors in Countrywide mortgage-backed securities.

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