Nevada, U.S. Bancorp go after B of A

The sea of litigation never seems to end. Nevada's state attorney general is accusing the bank giant of repeatedly raising interest rates on problem borrowers, even as it was modifying their loans - and even though it had reached an agreement with the state to lower rates. The state wants to rip up the agreement so that it can sue the bank over allegations of deceptive lending, marketing and loan servicing practices. From the NYT:

The Nevada filing also maintains that Countrywide, which Bank of America acquired in 2008, did not deliver necessary loan documentation when it put together mortgage securities and sold them to investors during the boom. Under the typical pooling and servicing agreements struck between Countrywide and investors who bought the securities, the bank was required to endorse the mortgage note and deliver it to the trustee overseeing the pool. Countrywide routinely failed to do so, the complaint notes. These paperwork failures should have barred the bank from foreclosing on borrowers, the Nevada complaint says, but it went ahead nonetheless.

Meanwhile, U.S. Bancorp, acting as trustee for a $1.75 billion mortgage pool that's made up of Countrywide loans, is seeking to force Bank of America to repurchase the underlying mortgage loans. From the Financial Times:

As with similar claims, US Bancorp said the high loss rate was the result of lax underwriting standards at Countrywide, the mortgage unit BofA acquired in 2008. US Bancorp demanded that BofA be forced to repurchase all of the loans because so many - "an extraordinary 66 per cent of the loans" in a sample - breached Countrywide's stated lending requirements.