A judge has rejected a bid by Countrywide Financial Corp. to move a lawsuit into federal court over its plans to make billions of dollars in loan modifications.
In a ruling this week U.S. District Judge Richard J. Howell in Manhattan sent the case, which is seeking class-action status, back to New York State Supreme Court, where it was initially filed in December.
Countrywide had argued that federal court was the proper venue, in part because the lawsuit raised "substantial, disputed federal questions" under the Truth-in-Lending Act.
"A federal defense has never been sufficient for federal question jurisdiction," the judge wrote.
Two investors in mortgage-backed securities sued the Bank of America Corp. unit in December over plans to make up to $8.4 billion in loan modifications as part of a settlement with 15 state attorneys general.
Shirley Norton, a B of A spokeswoman, said it would appeal the ruling.
