Bank of America Corp. told the plaintiffs' lawyers in an investor suit against it Monday that they have no standing to sue the company for modifying securitized home loans.
Greenwich Financial Services, a broker-dealer, filed the suit last week, claiming that B of A could not change mortgage terms without the permission of investors in securities backed by the loans. The lawsuit seeks class-action status. It stemmed from B of A's agreement in October with 15 states to modify 400,000 loans originated by Countrywide Financial Corp., which the Charlotte banking company bought in July.
In a three-page letter dated Monday, B of A's attorney, John Beisner of O'Melveny & Myers LLP, wrote that in order to have standing to sue the plaintiffs must have 25% of the voting rights in the securitizations and must give written notice to the bond trustees.
The letter to Grais & Ellsworth LLP, which represents Greenwich, said the bondholder complaint "lacks standing" because the pooling and servicing agreement governing the securities "limits the ability of investors to bring lawsuits against the servicer" and does not include an exception for class actions.
