UPDATE 2-BofA wins dismissal of big mortgage investors suit

* Judge will allow filing of narrowed complaint

* Plaintiffs allegedly misled on $352 billion securities

* Bank of America bought Countrywide in July 2008
(Adds details from opinion, comment, JPMorgan)

By Jonathan Stempel

NEW YORK, Nov 5 (BestGrowthStock) – Bank of America Corp (BAC.N: )
said it won the dismissal of a lawsuit by investors who claimed
its Countrywide unit misled them about its lending practices in
documents for $352 billion of mortgage securities offerings.

U.S. District Judge Mariana Pfaelzer in Los Angeles
narrowed the potential scope of claims by purchasers of
mortgage-backed securities (MBS) led by the Iowa Public
Employees’ Retirement system, Thursday’s ruling shows.

Bank of America, which bought Countrywide in July 2008,
said the ruling means no more than 22 offerings with a
principal amount of $31 billion could be covered in an amended
complaint, down from an original 427 offerings.

Michael Goldberg, a lawyer for the Iowa fund, did not
immediately return a call on Friday seeking comment.

The January complaint sought to unwind the investors’
purchases of mortgage securities. It accused Countrywide and
many underwriters of misrepresenting the risks of owning
securities issued between January 2005 and November 2007.
Countrywide was the largest U.S. mortgage lender at the time.

Judge Pfaelzer said in her ruling that the investors lacked
standing to challenge those offerings they did not actually
buy, and waited too long to sue on some of their claims.

“Each MBS is backed by a pool of unique loans, and the
representations made in the prospectus supplements accompanying
the issuance of those securities are themselves unique,” the
judge wrote.

“Plaintiffs argue that they have standing to sue over any
offering issued pursuant to a common registration statement.
Plaintiffs are mistaken,” she went on. “If plaintiffs seek to
represent investors in all tranches, they must also specify in
which tranches they invested.”

A tranche is a piece of a securities offering.

Pfaelzer granted 30 days to file an amended complaint. She
also dismissed JPMorgan Chase & Co (JPM.N: ) as a defendant.

“Courts require a certain level of precision in pleadings,”
said Kathleen Engel, co-author of the forthcoming book “The
Subprime Virus” and associate dean at Suffolk University Law
School in Boston. “Investors would have to demonstrate material
deficiencies in the disclosures that they relied on, to their
detriment. It’s a very fact-specific inquiry.”

Analysts have said private investors may struggle to force
banks to buy back mortgage securities, even after revelations
that major lenders and servicers may have lost, botched or
fraudulently submitted documents in a rush to foreclose.

They said Fannie Mae (FNMA.OB: ) and Freddie Mac (FMCC.OB: ),
the giant housing finance companies, have more leverage because
of their size, and the dependence on the mortgage market on
their involvement. [ID:nN2197588]

The case, which has another pension fund as the named
plaintiff, is Maine State Retirement System et al v.
Countrywide Financial Corp et al, U.S. District Court, Central
District of California, No. 10-00302.
(Reporting by Jonathan Stempel in New York; Editing by Gary
Hill)

UPDATE 2-BofA wins dismissal of big mortgage investors suit