The banking cartels and Wall Street Wizards did not just commit Financial Terrorism against individual Americans, according to 17 lawsuits filed last week, they materially misrepresented facts to the Federal Government….and by extension, you and I are stuck paying the bill. According to the lawsuits, the banking cartels lied…..and they lied big….really big. Read the New York Times Story Here
Now read the allegations contained within just one of the lawsuits. The problem is none of the bankers have been held accountable for any of this….and you and I are paying a massive price.…
Defendants falsely represented that the underlying mortgage loans
complied with certain underwriting guidelines and standards, including representations that
significantly overstated the ability of the borrowers to repay their mortgage loans.
Between September 30, 2005 and November 5, 2007, Fannie Mae and Freddie
Mac purchased over $6 billion in residential mortgage-backed securities (the ” GSE Certificates“)
issued in connection with 23 BOA-sponsored and/or BOA-underwritten securitizations.
The Registration Statements contained statements about the characteristics and
credit quality of the mortgage loans underlying the Securitizations, the creditworthiness of the
borrowers of those underlying mortgage loans, and the origination and underwriting practices
used to make and approve the loans. Such statements were material to a reasonable investor’s
decision to invest in mortgage-backed securities by purchasing the Certificates. Unbeknownst to
Fannie Mae and Freddie Mac, these statements were materially false, as significant percentages
of the underlying mortgage loans were not originated in accordance with the represented
underwriting standards and origination practices and had materially poorer credit quality than
what was represented in the Registration Statements.
The Registration Statements also contained statistical summaries of the groups of
mortgage loans in each Securitization, such as the percentage of loans secured by owneroccupied
properties and the percentage of the loan group’s aggregate principal balance with
loan-to-value ratios within specified ranges. This information was also material to reasonable
investors. However, a loan level analysis of a sample of loans for each Securitization ““ a review
that encompassed thousands of mortgages across all of the Securitizations ““ has revealed that
these statistics were also false and omitted material facts.
Defendant BOA Securities (an underwriter) is directly responsible for the
misstatements and omissions of material fact contained in the Registration Statements because it
prepared these documents to market and sell the Certificates to Fannie Mae and Freddie Mac.
Defendants ABF Corp. (a depositor), BOA Mortgage (a depositor), BOA Funding (a depositor),
and the Individual Defendants are also directly responsible for the misstatements and omissions
of material fact contained in the Registration Statements filed by ABF Corp., BOA Mortgage,
and BOA Funding because they prepared, signed, filed and/or used these documents to market
and sell the Certificates to Fannie Mae and Freddie Mac.
Fannie Mae and Freddie Mac purchased over $6 billion of the Certificates
pursuant to the Registration Statements filed with the SEC. These documents contained
misstatements and omissions of material facts concerning the quality of the underlying mortgage
loans, the creditworthiness of the borrowers, and the practices used to originate such loans. As a
result of Defendants’ misstatements and omissions of material fact, Fannie Mae and Freddie Mac
have suffered substantial losses as the value of their holdings has significantly deteriorated.
BOA National is one of the nation’s largest banks and a leading sponsor of
mortgage-backed securities. BOA National is also the direct parent corporation of ABF Corp.,
BOA Mortgage, and BOA Funding. As stated in the Prospectus Supplement for the ABFC
2006-OPT3 Securitization, ” [BOA National] and its affiliates have been active in the
securitization market since inception.” The volume of loans originated and aggregated by BOA
National made it possible for BOA Corp. to consistently securitize tens of billions of dollars
worth of mortgage loans during the time period relevant here. In 2005, BOA Corp. securitized a
total of $95.1 billion of mortgages. See Bank of America Corp., 2006 Annual Report, at 119. In
2006, BOA Corp. securitized a total of $65.5 billion of mortgages. Id. In 2007, BOA Corp.
securitized a total of $84.5 billion of mortgages.
from approximately 2005 through
2007, BOA’s involvement in the mortgage-backed securitization industry was substantial.
Defendants indeed had enormous financial incentives to complete as many offerings as quickly
as possible without regard to ensuring the accuracy or completeness of the Registration
Statements, or conducting adequate and reasonable due diligence. For example, ABF Corp.,
BOA Mortgage, and BOA Funding, as the depositors, were paid a percentage of the total dollar
amount of the offerings upon completion of the Securitizations, and BOA Securities, as the
underwriter, was paid a commission based on the amount it received from the sale of the
Certificates to the public.
The push to securitize large volumes of mortgage loans contributed to the absence
of controls needed to prevent the inclusion of untrue statements of material facts and omissions
of material facts in the Registration Statements. In particular, Defendants failed to conduct
adequate diligence or to otherwise ensure the accuracy of the statements in the Registration
Statements pertaining to the Securitizations.
Download the Bank of America Complaint Here:
Then click here for all 17 Lawsuits!