Bank Of America, Countrywide | featured news

Most of the $40 billion Bank of America has set aside to pay out over the mortgage meltdown can be blamed on malfeasance at Countrywide Financial. But some investors say that BofA’s hands are not totally clean in this mess — and that the bank has gotten off too easy thus far.

The $1-billion civil suit alleges that BofA's Countrywide fraudulently deceived mortgage finance giants Fannie Mae and Freddie Mac into believing the company's risky loans were safe and sound.

The Justice Department is expected to announce Wednesday a settlement with Bank of America Corp. that resolves accusations that its Countrywide Financial unit engaged in discriminatory mortgage-lending practices, according to a person familiar with the matter.

California is trying to determine whether BofA and its Countrywide Financial subsidiary sold investments backed by risky mortgages to investors in California under false pretenses, a source says. Investigators with the state attorney general's office have subpoenaed Bank of America Corp. in connection with the sale and marketing of troubled mortgage-backed securities to California investors, according to a person familiar with the probe.

Moody's downgraded Bank of America's underlying mortgage-servicing ratings to reflect the challenges the bank continues to face with the integration of Countrywide.

Bank of America Corp's Countrywide mortgage unit has been sued by investors claiming they were victimized in a "massive fraud" when they bought mortgage-backed securities.

Allstate Corp has sued Bank of America Corp and 18 other defendants over losses it said it suffered on more than $700 million of mortgage debt it bought from Countrywide Financial Corp.