Residential Capital LLC is suing Bank of America and 11 other mortgage lenders, claiming the lenders sold poor-quality loans which led to the now-defunct mortgage company’s bankruptcy, Bloomberg reports.
In May 2012, Residential Capital filed for bankruptcy protection after investors who bought mortgage-backed bonds claimed they were loaded with faulty loans, Bloomberg reports. It was liquidated to resolve more than $100 billion in potential lawsuits.
Two years later, ResCap filed 12 similar lawsuits on May 13 in U.S. Bankruptcy Court against Bank of America, Summit Financial, Synovus Mortgage Corp., Primary Capital Advisors, Cadence Bank, Mortgage Investors Group, Honor Bank, First Mariner Bank, CMG Mortgage, Citizens First Wholesale Mortgage, RBC Mortgage Co. and PHH Mortgage Corp.
The liquidated mortgage company is seeking to recover “billions of dollars in liabilities and losses” over the “defective” loans, ResCap says in the suit. It wants the banks held responsible for more than 24 lawsuits alleging Residential Capital securitized bad loans, as well as for the hundreds of claims—including securities fraud and breach of warranty—that it faced in bankruptcy.
Bank of America is a successor to First Republic Thrift & Loan and First Republic Savings Bank, which sold ResCap more than 240 mortgage loans with a principal greater than $165 million.
Bank of America been tied to a number of investigations tied to the financial crisis in past months.
Read more at Bloomberg.
Written by Cassandra Dowell