Greenwich Financial Service Fund sued Countrywide Financial Corp, the troubled home lender that Bank of America (NYSE:BAC) recently brought over claims an agreement to reduce payments on mortgages by $8.4 billion would hurt investors.

The fund said that 400,000 mortgages will decline under the deal, and that investors will be harmed by Bank of America’s settlement that was on behalf of Countrywide Financial Corp.

In the proposed group lawsuit the hedge fund demanded according to lawyer for the fund, a declaration that “Countrywide must purchase at par every mortgage loan that it sold to any of the 374 securitization trusts” its likely that Countrywide could owe the trust $80 billion.

Bank of America has made clear that loan modifications have been occurring for decades and without challenges or objections.

Read full report: Bloomberg

Bank of America who own Countrywide Financial Corp will today announce a program to help upto 125,000 Californian homeowners who are struggling with risky mortgages from Countrywide.

The deal will save mortgage holders billions of dollars, and will be the nation’s largest loan modification program to settle charges of lending abuse brought by California and other states.

The Bank of America Corps. Program is set to reduce payments to countrywide borrowers and up to $8.7 billion in other benefits nationwide. Across the nation almost 400,000 loans will be examined, out of that around 125,000 would be in California to find the best way to rework the loan to make it more affordable for the struggling mortgage holder, this could include reducing the interest or principal or completely switching customers for fixed rate loans Although banking officials are aware than some borrowers are beyond help and they would need additional help from the investors who owned the loans, however this has not been easily attainable in the past.

Read the full article: Latimes

Bank of America’s (NYSE: BAC) Countrywide Financial have been sued by Connecticut after it has been said that the company pushed borrowers into taking risky loans that they could not afford, other states such as California, Illinois, and Florida have also all filed similar charges, and we suspect more will follow suit.

Attorney General Richard Blumenthal of Connecticut wants Countrywide to make changes to mortgages that violated state laws and make restitution to affected borrowers, Blumenthal is also seeking fines of $100,000 per violation of state banking laws, and up to $5,000 per violation of state consumer protection laws.

Blumethal said he will be looking into the investment side of the consumer fleecing as he has shed loads of documentation to aid him in the process, he is also concerned as to why the Bank of America is still keeping the Countrywide name? As we know it takes 20 years to build a good reputation and five minutes to ruin it. Let’s face it how many people will go and get a loan at countrywide after all the bad press and the fact the company is being sued left right and centre by states all over America.

The Brand is clearly negative at this point.

I wonder is the Bank of America will rebrand Countrywide in a year or so. What are your views on the countrywide fleecing?

Source: blogstock

Read more about U.S. business news here.

It seems that BofA has had to make this choice because the balance sheets are constrained, these are to do with their agency mortgage bonds, as yet though Bank of America has not yet commented on this.

In other Bank of America news, their charitable foundation has decided to select five high school students. These will be in the Richmond area and will to participate in a leadership summit in Washington D.C on July 13 to 18 2008.

These five students will join more than 200 other students from across the U.S., where they will learn how civic, non-profit and business leadership work together, it is also hoped that together these students will be able to create a vibrant community and strong economy.

As part of this program, these students will participate in an eight-week summer internship for a local non-profit organization, this is a paid program.

Source

Speaking at a Wall Street Journal conference, Kenneth Lewis said “We think we’ve got it right,” he also said “We still have room to make it a financially attractive transaction.” Many thought that with some advocates, lawyers and politicians criticizing the merger, Lewis would not go ahead with the deal, but he has said that he will not walk away from the deal. Bank of America are also standing firm on their dividend payout, they have said that the deal of a 64 cent-a-share dividend is safe.

However Bob Stickler, who is a spokesman for the bank has said that at a recent dinner with Lewis, he did not once use the word safe. Such a high dividend is seen as a surprise to a number of other banks, as they are slashing there dividends, like Citigroup Inc, Washington Mutual Inc and Wachovia Corp. According to Reuters, Bank of America shares on the New York Stock Exchange has fallen 2.6 percent to a five year low of $28.85. Countrywide has fallen 6 percent to $4.58.