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March 31, 2014

BofA Wins Recommendation for U.S. Mortgage Suit Dismissal

“Bank of America Corp. should win dismissal of a U.S. Justice Department lawsuit accusing it of misleading investors about the quality of loans tied to $850 million in mortgage-backed securities, a judge said.

“The government’s claim that the bank made false statements wasn’t properly supported, U.S. Magistrate Judge David Cayer in Charlotte, North Carolina, said yesterday in a recommendation to dismiss the case. The U.S., which filed a notice that it will object, has a chance to challenge the recommendation before a district court judge and appeal any dismissal.

“Dismissal of the case “will represent a significant setback for the government’s legal efforts and likely mark the beginning of the end for crisis-era litigation,” Isaac Boltansky, a policy analyst at Compass Point Research & Trading LLC in Washington, said today in a research note.

“The proposal comes as the U.S. seeks to punish companies for wrongdoing that helped trigger the financial crisis. The case and others like it allege violations of a law that is a relic of the savings-and-loan crisis of the 1980s, allowing civil suits to reach back further in time to target bad behavior and seek larger damages in court.”

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Read full Bloomberg article here.

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