Countrywide Financial Corp. (2011)
Lead Plaintiff Deadline: Mar 29, 2011 + Deadline passed
Summary of Case:
A securities class action has been filed against Countrywide Financial Corp. (2011) ("Countrywide") on behalf of all persons who purchased or otherwise acquired interests in Countrywide Financial Corporation, Countrywide Home Loans, Inc., Countrywide Capital Markets, LLC, CWALT, Inc. ("CWALT"), and CWMBS, Inc. ("CWMBS") (all collectively, "Countrywide") mortgage pass-through certificates CWHL 2006-HYB2, CWALT 2005-43, CWHL 2006-12, CWALT 2007-1T1, CWALT 2007-12T1, CWHL 2007-J2, CWHL 2007-17 and CWALT 2007-25 (collectively, "Issuing Trusts") (the "Certificates"). This case has been filed in the United States District Court of Connecticut.
The complaint alleges that Countrywide, including certain officers and directors of CWALT and CWMBS, misrepresented the quality of the underlying mortgages that had been pooled and placed in the issuing trusts in each of the Certificates' offering documents. Furthermore, Countrywide did not follow the underwriting and appraisal standards described in the Registration Statements and Prospectus Supplements when issuing mortgages to borrowers. Moreover, the mortgages held by the Issuing Trusts and underlying the Certificates were issued based on appraisals that overstated the value of the underlying properties, thereby exposing the Issuing Trusts and the Class to greater risk of losses in the event of foreclosure. As a result of the material misrepresentations and omissions in the Registration Statements and Prospectus Supplements, the Class purchased securities that were far riskier investments 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 many borrowers did not have sufficient financial resources to satisfy their mortgage payments and that the properties underlying the mortgages were worth materially less than the loans issued. The representations made in the Registration Statements and Prospectus Supplements were materially false and misleading because at the time of the Certificates offerings, Countrywide's underwriting standards were not designed to evaluate borrowers' ability to repay their loans or to accurately assess the value of the mortgaged property underlying the Certificates. These adverse factors were not revealed and/or adequately addressed in the offering documents. Had the Class known these truths, they would not have purchased the Certificates, or they would not have purchased them at the prices that were paid.
If you purchased this company's shares during the Class Period and suffered a loss or for further information about the case, please review the links below.