July 2, 2022

Volume XII, Number 183

Advertisement
Advertisement

July 01, 2022

Subscribe to Latest Legal News and Analysis

June 30, 2022

Subscribe to Latest Legal News and Analysis

June 29, 2022

Subscribe to Latest Legal News and Analysis

North Carolina Federal Judge Denied Bank of America’s Motion to Dismiss $850M Mortgage Fraud Case

Last week, Magistrate Judge David S. Cayer of the U.S. District Court for the Western District of North Carolina denied Bank of America’s motion to dismiss the Security and Exchange Commission’s claims against it in SEC v. Bank of America Corporation, et al. The SEC’s complaint is founded upon allegations that “[t]he Bank of America  entities misrepresented and omitted certain material facts regarding an RMBS [issuance], backed by more than $855 million of residential mortgages, known as BOAMS 2008-A, that was offered and sold in 2008.”

Bank of AmericaBank of America supposedly portrayed the RMBS offering as being backed by “prime” mortgage loans. But according to the SEC, BOAMS 2008-A was rife with “wholesale” loans, a class of loans allegedly described as “toxic waste” by none other than Bank of America’s CEO at the time. The SEC claims that these “toxic” loans were originated through brokers unaffiliated with Bank of America, and deviated significantly from Bank of America’s own underwriting guidelines.

In denying Bank of America’s motion to dismiss, the Court found that the SEC’s Complaint alleged sufficient facts to establish the defendants’ material misrepresentations and omissions. In particular, the court took note of the SEC’s allegations that Bank of America revealed outside of the disclosure documents to certain of its investors (Wachovia and to the Federal Home Loan Bank-SF) that approximately 70% of the loan pool originated from the “wholesale channel.”  According to the Court, “[d]efendant’s decision to give the wholesale channel information to those investors creates the inference that the defendants knew or reasonably should have known that this information was material.”

© 2022 Bilzin Sumberg Baena Price & Axelrod LLPNational Law Review, Volume IV, Number 101
Advertisement
Advertisement
Advertisement
Advertisement
Advertisement
Advertisement

About this Author

Robert M. Siegel, Corporate, Tax, Attorney, Bilzin Sumberg Law Firm
Partner

Robert M. Siegel is a Partner in the Corporate & Tax and Restructuring & Bankruptcy Groups. He concentrates his practice in commercial finance, securitizations, debt restructuring and loan workouts. He is experienced in all aspects of the Uniform Commercial Code, and in particular, secured transactions under Article 9. Formerly with a Wall Street based law firm, Bob has been involved in complex financial transactions nationwide and abroad. Bob was an asset-based lender and a commercial real estate lender for several years prior to entering law school, and...

305-350-2421
Shalia Sakona, LItigation Attorney, Bilzin Sumberg Law Firm
Associate

Shalia Sakona is an associate in the Litigation Group. Her practice is focused on complex commercial litigation, including the representation of sellers and originators of mortgage loans against major financial institutions in mortgage repurchase and indemnification suits throughout the U.S. 

While attending law school, Shalia interned with the general counsel of a commercial real estate investment and development company. She also served as a notes and comments editor...

305-350-7216
Advertisement
Advertisement
Advertisement