Bank of America (BAC) asked the U.S. District Court in Nevada for a case management conference to determine the sequence of proceedings it must deal with in the “unprecedented breadth and complexity” of the Nevada attorney general’s case against the bank. In October 2008, Nevada AG Catherine Cortez Masto reached an agreement with Countrywide Financial Corp. to settle allegations of mortgage origination and servicing fraud. Countrywide agreed to modify a specific number of mortgages as part of the settlement. But at the end of August, Masto filed a second amended complaint against Countrywide and BofA, claiming the bank and its subsidiaries violated the consent judgment by failing to provide the modifications and initiating a foreclosure on some properties in the modification process. Masto said in the amended complaint that because BofA violated the judgment, her office would be released from the agreement and could pursue its original claims against Countrywide for consumer fraud in originating, marketing and servicing mortgages. Her office told HousingWire Wednesday that criminal charges would be coming soon to the entire industry. BofA responded in court last week. “Among other things, the bank requests a case management conference, given the broad expansion of the state’s already unwieldy allegations,” a spokesman said. The banking giant requested the conference in a court filing Sept. 16, assuming Masto’s motion to dissolve the agreement is granted. Such a conference would set a schedule for how such a massive case would proceed. “The scope of the released claims is undeniably vast, covering entire sectors of the mortgage industry — such as mortgage origination, including marketing, underwriting and securitization practices,” BofA said in its motion. The bank already faces billions in litigation expenses as a result of the mortgage meltdown related to Countrywide, which it acquired in 2008. It has shed businesses, employees and granted Warren Buffett very favorable terms for his $5 billion investment in the bank. Just recently, BofA, and 16 other financial institutions, were sued by the Federal Housing Finance Agency, which alleged the bank and Countrywide misrepresented billions in mortgage-backed securities sold to Fannie Mae and Freddie Mac. Masto served 73 requests for information to BofA, Countrywide and six other defendants that BofA claims were not parties to the consent judgment they allegedly violated, according to the court filing. Masto sought information on documents relating to servicing procedures for “potentially tens of thousands” of borrowers. According to the BofA court filing, the discovery among the different parties was limited to between Jan. 1, 2009, and June 30, 2011, triple the original time period, according to BofA. In comparison, the look-back reviews into major mortgage servicers will span 4.5 million loan files from Jan. 1, 2009, to Dec. 31, 2010. According to the court filing, Masto also issued subpoenas to 26 financial institutions, ratings agencies, insurance companies and others. The deadline for discovery is Sept. 17, 2012. Before BofA tackles the Masto case, the bank asked the Nevada District Court to force Masto to prove the company and Countrywide are in violation of the original consent judgment. “The price of pursuing a complaint that by (Masto’s) own admission covers virtually every corner of the American mortgage industry is acceptance of a case management regime that accounts for its scope,” BofA said in its filing. Write to Jon Prior. Follow him on Twitter @JonAPrior
BofA looks to dissect massive Nevada AG case
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