On December 5, 2013 the Court granted final approval of a $500 million landmark, mortgage-backed securities (MBS) class action litigation against Countrywide Financial Corporation and others, led by Lead Plaintiff, the Iowa Public Employees’ Retirement System (IPERS). It is the nation’s largest MBS-federal securities class action settlement. The settlement brings to a close the consolidated class action lawsuit brought in 2010 by multiple retirement funds against Countrywide and other defendants for securities violations involving the packaging and sale of MBS. Bank of America acquired Countrywide in 2008.
In addition to the Lead Plaintiff, the Iowa Public Employees’ Retirement System, Orange County Employees’ Retirement System (“OCERS”), the State of Oregon, by and through the Oregon State Treasurer and the Oregon Public Employee Retirement Board on behalf of the Oregon Public Employee Retirement Fund (“Oregon”) and the General Board of Pension and Health Benefits of the United Methodist Church (“the General Board”), all were appointed class representatives and Cohen Milstein was appointed Class Counsel in the litigation in October 2011.
On April 17, 2013, Plaintiffs in the landmark mortgage-backed securities (MBS) class action litigation against Countrywide Financial Corporation and others, led by Lead Plaintiff, the Iowa Public Employees’ Retirement System (IPERS), agreed to a $500 million settlement.
If approved by the U.S. District Court in the Central District of California, the settlement will bring to a close the consolidated class action lawsuit brought in 2010 by multiple retirement funds against Countrywide and other defendants for securities violations involving the packaging and sale of MBS. Bank of America acquired Countrywide in 2008.
On May 14, 2010, Judge Mariana R. Pfaelzer of the United States District Court for the Central District of California appointed Cohen Milstein lead counsel in the securities litigation case pending against Countrywide Financial Corporation. Cohen Milstein’s client, the Iowa Public Employees’ Retirement System (IPERS), was appointed lead plaintiff.
Cohen Milstein Sellers & Toll PLLC (“Cohen Milstein”) announces that a class action lawsuit has been filed on behalf of purchasers of certain mortgage-backed securities sponsored by affiliates of Countrywide Financial Corporation and its wholly-owned subsidiary Countrywide Home Loans, Inc. (collectively, “Countrywide”) and related trusts (the “Issuing Trusts”), issued between 2005 and 2007. The case has been assigned a civil action number of 10-cv-00302-SJO-PJW and is pending in the United States District Court for the Central District of California.
The Complaint alleges claims under the Securities Act of 1933 (the “Securities Act”) as a class action on behalf of investors who purchased or otherwise acquired the following certificates (the “Class” or “Plaintiffs”): Alternative Loan Trust Certificates issued by CWALT, Inc. (“CWALT”); CWABS Asset-Backed Trust Certificates issued by CWABS, Inc. (“CWABS”); CHL Mortgage Pass-Through Trust Certificates issued in 2005 and 2006 by CWMBS, Inc. (“CWMBS”); and CWHEQ Revolving Home Equity Loan Trusts and Home Equity Loan Trusts issued by CWHEQ, Inc. (“CWHEQ”) (collectively referred to as the “Certificates”).
The Complaint alleges that defendants issued the Certificates pursuant or traceable to certain registration statements (the “Registration Statements”) filed with the U.S. Securities and Exchange Commission (“SEC”). The Certificates were then sold to Class members pursuant to certain prospectuses (the “Prospectus Supplements”), which also were filed with the SEC and incorporated by reference into the Registration Statements.
The Complaint charges that the Registration Statements and Prospectus Supplements issued in connection with the Certificates contained materially false and misleading statements and omitted material information in violation of Sections 11, 12(a)(2) and 15 of the Securities Act.
Specifically, the Complaint charges that Countrywide, certain officers and directors of CWALT, CWABS, CWMBS and CWHEQ, and certain investment banks, which served as underwriters of the Certificates, violated the Securities Act by issuing the Certificates pursuant to Registration Statements and Prospectus Supplements that misstated and omitted material information regarding, inter alia, the process used to originate and the quality of mortgages that were pooled in the Issuing Trusts and were used as the financial basis for the Certificates. For example, the Complaint alleges that Countrywide did not follow the underwriting and appraisal standards described in the Registration Statements and Prospectus Supplements. Indeed, Countrywide issued mortgages to borrowers that did not satisfy the requisite eligibility criteria as described in the Registration Statements and Prospectus Supplements. Likewise, the mortgages held by the Issuing Trusts and underlying the Certificates were based on collateral appraisals that overstated the value of the underlying properties, thus exposing the Issuing Trusts and Class members to losses in the event of foreclosure. As a result of the material misrepresentations and omissions in the Registration Statements and Prospectus Supplements, investors purchased securities that were far riskier than represented.
According to the Complaint, by mid-2007 the mortgages held by the Issuing Trusts and underlying the Certificates began suffering accelerating delinquencies and defaults. The defaults led to real estate foreclosures, which revealed that the properties underlying the mortgages were worth materially less than the loans issued to the borrowers, and the borrowers did not have sufficient financial wherewithal to cover the outstanding mortgage balances. The representations made in the Prospectus Supplements were materially false and misleading because at the time of the Certificates offerings, Countrywide’s underwriting standards were not designed to evaluate a borrower’s ability to repay or the true value of the mortgaged property underlying the Certificates. These adverse factors were not revealed and/or adequately addressed in the offering documents. Had Plaintiffs and the other members of the Class known the truth, they would not have purchased the Certificates, or they would not have purchased them at the inflated prices that were paid. Plaintiffs seek to recover damages on behalf of all purchasers of the Certificates issued between 2005 and 2007.