Countrywide Financial Corp. lost a bid to dismiss most of a lawsuit alleging the company, now owned by Bank of America Corp., steered borrowers into risky subprime mortgages.
Judge Dana Sabraw of the U.S. District Court for the Southern District of California in San Diego wrote in a May 18 ruling that borrowers could pursue racketeering and unfair competition claims against the company.
Suits against B of A and Countrywide have been consolidated into a single federal case.
"We are pleased that we are helping the ultimate victims of the mortgage scheme that has nearly destroyed our economy," Joe R. Whatley, an attorney for the plaintiffs, said Thursday in a press release. "We intend to continue to prosecute this action until those who obtained subprime mortgages from Countrywide are adequately compensated."
B of A acquired Countrywide, once the largest U.S. home lender, for $2.5 billion in July. Countrywide's lending practices prompted investigations by attorneys general in California, Florida and other states, leading to an October settlement in which B of A agreed to modifications that could save 390,000 borrowers as much as $8.4 million.