Bloomberg News

Bank of America Sued by Fund Over Mortgage-Backed Securities

March 02, 2012

Bank of America Corp. was sued by Asset Management Fund over claims it gave faulty information about the loans backing $239.5 million worth of residential mortgage-backed securities.

The suit accuses the Charlotte, North Carolina-based bank and other defendants of making “material misrepresentations and omissions” about underwriting standards used to issue mortgage loans that were pooled together into the securities, which were sold to Chicago-based Asset Management Fund, according to court documents.

“Each of the defendants knew, or at a minimum was negligent in knowing, that its representations and omissions were false and/or misleading at the time they were made,” lawyers for Asset Management Fund said in the court documents, which were filed in New York State Supreme Court yesterday.

Pools of home loans securitized into bonds were a central part of the housing bubble that helped send the U.S. into the biggest recession since the 1930s. The housing market collapsed, and the crisis swept up lenders and investment banks as the market for the securities evaporated.

Asset Management Fund, which does business as AMF Funds, sued JPMorgan Chase & Co. in the same court over similar claims last month. The firm, which is managed by Shay Assets Management Inc., had about $590 million in assets under management in 2011, according to its website.

Lawrence Grayson, a spokesman for Bank of America, said in an e-mail that the company had no comment on the lawsuit.

The case is Asset Management Fund v. Bank of America Corp. (BAC), 650614/2012, New York State Supreme Court (Manhattan.)

To contact the reporter on this story: Chris Dolmetsch in New York at cdolmetsch@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net.


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