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Tuesday
Oct192010

Bank of America Could Face Investor Lawsuit Over Soured Mortgage Loans

Photo Courtesy - Bank of America(NEW YORK) -- A group of investors has started a legal process that could force Bank of America to take back some mortgages that have been bundled and sold.

While the lead lawyer on the case would not identify the investors, Bloomberg News reports PIMCO, Blackrock and the Federal Reserve Bank of New York are part of the action.  Bloomberg also reported that the investors are hoping to force Bank of America to buy back $47 billion in bad mortgages.

No suit has been filed yet, but the investors' lawyers have reached out to Bank of America as part of a 120-day-long process that could lead to a lawsuit.

A Bank of America spokesperson responded to the action by saying, "We believe Bank of America has complied fully with its obligations in regards to these securities."

As shoddy documentation practices at the mortgage divisions of several large banks became public, there have been concerns that these banks may be forced to reconsider some sales of mortgage securities.

Bank of America stock closed down more than four percent Tuesday.

Copyright 2010 ABC News Radio

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