A Houston law firm said its clients want Bank of New York to investigate pools used in more than $26 billion of residential mortgage-backed securities issued by beleaguered lender Countrywide Financial Corp. But the bank, which is trustee for the RMBS, tells HousingWire that it won’t act until it receives direct instructions from investors. Gibbs & Bruns said its clients, who represent more than a quarter of the voting rights of the RMBS, “demand repurchase of mortgages that didn’t conform to the required representations and warranties at the time they were used as collateral for RMBS.” “We believe our clients’ instruction, and the terms of the applicable [pooling and servicing agreements], require the trustee to take action on each of these transactions,” said Gibbs & Bruns partner, Kathy Patrick, who is lead counsel for the investors. “Our clients will pursue all contractual remedies available to them in these and the many other Countrywide RMBS deals where they have instructed us to take action to protect their rights and recover their losses,” Patrick said. Three former executives of Countrywide, which was acquired by Bank of America in 2008, are currently battling civil-fraud charges brought by the Securities and Exchange Commission. Write to Jason Philyaw.
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