UPDATE 2-BofA’s Countrywide wins dismissal of mortgage case

* Suit attempted to force bank to buy back loans

* Plaintiffs didn’t get enough investor support – judge

* Two plaintiff investment funds considering appeal
(Adds detail from ruling, comments)

SAN FRANCISCO, Oct 13 (BestGrowthStock) – Investors cannot force
Countrywide Financial Corp to buy back mortgages that the
lender agreed to modify, a New York court ruled.

The decision by New York State Supreme Court Justice
Barbara Kapnick, made public on Wednesday, dismissed a lawsuit
brought by two investment funds. The funds had sued Bank of
America Corp’s (BAC.N: ) Countrywide unit over a deal with some
11 state attorneys general in 2008 to modify $8.4 billion of
loans made to roughly 400,000 borrowers.

Investors who own mortgage securities typically receive
interest and principal payments. If servicers modify the
underlying loans to reduce borrower obligations, investors
would receive lower payments.

But Kapnick ruled that the two plaintiff investment funds
had not complied with requirements necessary to sue —
including a provision mandating that they gather the support of
25 percent of investors.

Bank of America spokeswoman Shirley Norton said they are
pleased the court recognized the 25 percent rule.

“These preconditions protect investors collectively against
ill-conceived litigation forays that could prove damaging to
investors — such as the Greenwich plaintiffs’ bid, which would
effectively halt all modifications of distressed mortgages,”
Norton said.

William Frey, president and CEO of Greenwich Financial
Services, said the company’s legal team will decide whether to
appeal.

In some instances, U.S. mortgage bond investors have been
able to band together to reach the 25 percent threshold.
[ID:nN21157207]

Kapnick’s ruling makes the need to bolster those efforts
“all the more obvious,” Frey said.

The judge ruled last week, but the court documents were
only made public on Wednesday.

The case is Greenwich Financial Services v. Countrywide
Financial, Index No. 650474/08, Supreme Court of the State of
New York, County of New York .
(Reporting by Dan Levine; Editing by Steve Orlofsky, Bernard
Orr)
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UPDATE 2-BofA’s Countrywide wins dismissal of mortgage case