A federal judge in California kept fraud claims alive in two institutional investor lawsuits against Countrywide Financial, which was purchased by Bank of America (BAC) in 2008.

The two plaintiffs are Belgium bank Dexia Holdings and nonprofit insurance and retirement investment firm Thrivent Financial for Lutherans. Thrivent is suing for losing money on 20 Countrywide RMBS it acquired, and Dexia is asking for recovery on 148 RMBS offerings.

The investors say they lost money on bonds containing Countrywide mortgages that had elevated loan-to-value ratios and other underlying risk factors that weren't properly disclosed.

Several other claims were dismissed for either being time-barred or inadequately pleaded. BofA, however, failed to get the fraud claims thrown out.

Judge Mariana Pfaelzer in U.S. District Court for the Central District of California ruled against BofA's attempt to block the plaintiffs' accusations of fraud and fraudulent inducement over alleged misrepresentations Countrywide made on loan underwriting standards, appraisal loan-to-value ratios and title transfers.

"The fraud and fraudulent inducement allegations are sufficient with respect to plaintiffs systemic abandonment of underwriting standards, appraisals, LTV ratios and ratings claims," Pfaelzer said in the Dexia case.

The court ruled in favor of Dexia saying it adequately showed the underlying loans were riskier than advertised, therefore less likely to produce the estimated long-term returns.

The court made the same finding in the Thrivent Financial case when Countrywide tried to argue the investor inadequately pleaded its loss-causation claim.

In response, Judge Pfaelzer wrote that Countrywide objected "that any decline in value (associated with RMBS) was actually caused by the downturn in the housing market and the global financial crisis. That is a factual question better addressed on a more complete record."

Several other claims were dismissed in both cases, including federal securities claims in the Dexia case that the court found to be time-barred.

Claims questioning the quality of the loan titles tied to the RMBS pools were dismissed in both cases for being insufficient. 

In both cases, the court additionally dismissed aiding and abetting, negligent misrepresentation and successor liability claims. Judge Pfaelzer dismissed those allegations for either being inadequately pled or for failing to provide necessary facts to support an individual claim.