Countrywide Home Loans

Second Circuit Overturns Fraud Judgment against Bank of America and Former Countrywide Executive

On May 23, 2016, a three-judge panel of the Second Circuit Court of Appeals overturned a judgment of fraud against Bank of America, Countrywide, and former Countrywide executive Rebecca Mairone in U.S. v Countrywide Home Loans, Inc.  In reversing the District Court and ruling for the Defendants, the Second Circuit vacated a $1.27 billion judgment against Bank of America and a $1 million judgment against Ms. Mairone.  The Second Circuit panel held that the evidence at trial showed at most an intentional breach of contract, which is insufficient as a matter of law to constitute fraud under the federal mail and wire fraud statutes.  Instead, to support a claim, the government was required, but failed, to prove that defendants’ intent at the time of contracting was not to comply with their contractual obligations.  Orrick represented Ms. Mairone in connection with the appeal. Opinion.

FDIC Sues BNY Mellon For Alleged Failure As Trustee of RMBS

On August 19, 2015, the Federal Deposit Insurance Corp., acting as receiver for Guaranty Bank, filed suit against Bank of New York Mellon Corp. in New York federal court, alleging that BNY breached its duties as trustee of 12 RMBS trusts that issued approximately $2 billion in certificates.  The trusts were sponsored by Countrywide Home Loans and EMC Mortgage Corp.  The FDIC alleges that BNY breached its contractual obligations by failing to provide notice of representation and warranty violations and demand Countrywide and EMC to replace or buy back the noncompliant loans, provided false regulatory certifications and remittance reports, and failed to take possession of complete mortgage files.  The FDIC asserts claims for breach of contract, the federal Trust Indenture Act, and the New York Streit Act.  Complaint.