New York Attorney General Schneiderman Drops Bomb on Bank of America Settlement and Bank of New York

The meltdown in the financial markets obscured an important development on the mortgage front, namely, that New York state attorney general Eric Schneiderman filed a motion to intervene in the proposed $8.5 billion settlement between Bank of America and the Bank of New York acting as trustee of 530 Countrywide residential mortgage securitizations.

We said when the deal was announced that it was not a done deal and it stank to high heaven, so we are glad to see confirmation of our dim view. In keeping, the motion charges Bank of New York with “fraudulent and deceptive conduct”. As we will see, the allegations that Schneiderman has made against Bank of New York opens up a whole new front of mortgage securitization liability, that of the trustees failing to live up to their contractual duties and worse, making ongoing certifications that they had. This is an area we’ve discussed at some length before and have been surprised hasn’t been taken up until now.

By way of background, the proposed settlement purportedly had Bank of New York acting on behalf of investors, although it conferred with only 22 and did not even go through the motions of consultation with the rest. In addition, we indicated, many of that 22, such as the New York Fed, had reason to support Bank of America getting a sweetheart deal if it alleviated questions about the bank’s solvency. Moreover, as we pointed out, Bank of New York itself had substantial conflicts of interest in entering into this deal. BofA represented nearly 2/3s of Bank of New York’s trustee business, and as Adam Levitin had noted prior to the settlement being filed that Bank of New York would “inevitably have to be deferential” to Bank of America.

But the biggest problem with the deal were the broad releases that went well beyond the matter at hand, which were breaches of representations and warranties (in simple terms, that investors were promised that the mortgages would meet certain standards and those promises were violated). One was effectively a payoff: that Bank of America gave Bank of New York indemnification that looked to be too good an offer to refuse. As we noted in an earlier post:

[T]he side letter also indemnifies the trustee broadly against liability in the pooling and servicing agreements, the contracts that govern these deals. Since trustees like Bank of New York provided multiple certifications that the trusts held the assets (and that would include observing the chain of title niceties) when lawsuits all over the country have established that that did NOT happen. In addition, a senior Countrywide employee in testimony in Kemp v. Countrywide said Countrywide had retained the notes (the borrower promissory note) when the trust was supposed to have them. Whoops!

So the trustees have a ton of liability the are eager to escape. And that means that the indemnification in the Bank of America side letter is tantamount to a very big bribe to Bank of NY to go along with this deal.

The motion objects to the settlement on multiple grounds:

1. The amount to be paid appears to be too low given the damages suffered

2. The other consideration (the undertakings by BofA) are pretty meaningless and don’t make up for the insufficient dough. Per the motion:

Given the steeply discounted cash payment, the value of any nonmonetary consideration is a crucial element in evaluating the Proposed Settlement’s fairness. Here, the Attorney General believes that the proposed settlement’s purported servicing improvements are too vague and ill-defined to provide any concrete value to investors.

3. The trustee failed to perform key duties it had promised to carry out in the contracts that govern these deals (the pooling and servicing agreement, or PSA), and made false certifications about its actions:

One of BNYM’s primary obligations as trustee under these PSAs was to ensure the proper transfer of loans from Countrywide to the Trusts. The ultimate failure of Countrywide to transfer complete mortgage loan documentation to the Trusts hampered the Trusts’ ability to foreclose on delinquent mortgages, thereby impairing the value of the notes secured by those mortgages. These circumstances apparently triggered widespread fraud, including BoA’s fabrication of missing documentation.

This is the first time I have ever seen a court filing discuss widespread document fabrication by a servicer. This of the proper transfers is germane for the BofA deal because BofA gives Bank of New York indemnification for this liability. And it’s even juicier: Bank of New York’s self dealing works to the disadvantage of the investors to whom it owes a fiduciary duty:

But as BNYM concedes in its petition here (Petition ¶¶ 78-81), Countrywide has inadequate resources. A side-letter agreement appended to the Proposed Settlement expands the benefit of the PSAs’ indemnification provisions by having BoA, now Countrywide’s parent company, expressly guarantee the indemnification obligations of Countrywide. In addition, the Proposed Settlement expands the indemnification to cover BNYM’s negotiation and implementation of the terms of the settlement, thus shielding the trustee from significant forms of liability in connection with the formation and implementation of a settlement which seeks to compromise the claims of the investors to whom BNYM owes fiduciary duties.

Although the motion discusses the constrained financial capacity of Countrywide, let us not forget that Bank of America has limited resources as well, so any valuable indemnification to Bank of New York comes out of what otherwise might have been available to pay the investors.

New York Attorney General Pleading in Bank of America Intervention 8-4-11

You can find the other filings made in connection with the motion here, here, here and here.

The motion goes into some detail as to how Bank of New York breached its duties to investors and the consequences of its failures:

Any action to foreclose requires proof of ownership of the mortgage. This must be demonstrated by actual possession of the note and mortgage, together with proof of any chain of assignments leading to the alleged ownership. Moreover, complete mortgage files give borrowers assurance that their properties are properly foreclosed upon. The failure to properly transfer possession of complete mortgage files has hindered numerous foreclosure proceedings and resulted in fraudulent activities including, for example, “robo signing.” These fraudulent activities have burdened borrowers as well as the courts with flawed foreclosure proceedings.

BNYM knew the scope of the loan documentation deficiencies because it issued detailed exception reports for the Trusts. These deficiencies impaired the value of the securities by compromising the collateral and imposing additional servicing costs.

The motion discusses how Bank of New York had a duty to notify investors and to try to stop Countrywide’s “widespread fraud in improperly prosecuting foreclosure actions” yet failed to do so.

In other words, this motion is significant not simply because it throws a very large spanner into the works of the BofA settlement and the misguided hopes that it would serve as a template for other miscreant banks. It also describes very clearly the substantial liability of trustees like Bank of New York thanks to their failure to make sure notes were transferred to the trusts as stipulated in the pooling and servicing agreements.

Although Schneiderman has chosen to use the Martin Act and other New York statutes as his basis of action, trustee like Bank of New York provide annual certifications in SEC filings that say (in very crude terms) that the trust had good title to its assets.

Given the widespread failure to convey notes to trusts as stipulated in the PSAs and the resulting train wreck in courtrooms around the US, many if not all of these certifications were false. All trustees did at least one annual certification after the deal closed; if a deal has less than 50 investors, they can seek an exemption from the SEC filing requirement. This means, unlike other areas of the mortgage mess, where damaged parties can sue only based contractual breaches, they can also sue trustees for securities fraud for making materially misleading SEC filings. And since the major trustees are too big to fail institutions by virtue the critical roles they play in custody, clearing, and settlement, it is going to be interesting to see how the officialdom will try to stuff this genie back in the bottle.

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  1. psychohistorian

    I noticed this somewhere else in my surfing today but your write up is excellent as usual, thank you.

    I see the genie back in the bottle options as:

    1. Our bought Congress critters will spin some legislation to memorialize all this away and pardon the perps.

    2. A big war starts and National Security is touted as reason to sweep all this under the rug.

    3. The world economies collapse (isn’t that what is happening) and the Too Big To Fail and Too Big to Prosecute narratives that have held the house of cards together continues.

    After all folks, the global inherited rich own the genie and the bottle don’t they?

    1. Mark P.

      The banks have screwed over too many entities, and now there’s money to be extracted in litigating and stripping them in their turn. And this genie cannot be put all the way back in the bottle, because much of this will proceed on a state-by-state basis, which the bought DC pols cannot easily prevent.

      Hence, options 1 and 3 are not really viable possibilities, in terms of getting the all the TBTFs off the hook in the long term.(Though certainly large sectors of the global economy may collapse.)

      As for a war, as in your option 3, that’s hard to calibrate. Even a war against Iran is probably not big enough for the national security rationale to be applied to the banks; conversely, a war against China is too big.

      So, since the TBTFs have sold on and are counterparties to a whopping 85 percent of their own risk, the interesting question is: who else goes down with BAC? .

      1. rafael bolero

        How about a war against your own people; “national emergency,” or whatever new term will fill in for martial law. Maybe a terror attack against a big bank? (BOA could just literally explode and collapse, Charlotte is a good central East Coast new-panic location, terror with a slight drawl, terror beyond NYC for the common man and woman). I’m kind of kidding, but kind of not. It could be angry extremist domestic rebel investors, NRA Blackwater types, bitter, blaming Obama-Bankers. National banking emergency, with a commission, which will become absurd in duration and jargon and pass from memory after the initial appearance of reacting, giving the rats time to jump and off what they can, deliver the findings after 2012 election, etc.

          1. ambrit

            Dear OBB;
            That should be “Argent Provocateurs” mes amis!
            As for ‘domestic terror attacks,’ look into the history, official and otherwise, of Timothy McVeigh (An Army of One?), the FBI counterterrorism agent in chief for New York just before 9/11, (PBS did a good documentary about him,) and the debacle around the Branch Davidians massacre. There are more than enough murky characters in our own ‘State Security Services’ to effectuate our worst nightmares.

          2. Procopius

            I don’t really know French, but I’ve read a lot about revolutionary history and I’m pretty sure it’s supposed to be “agents provocateur”.

        1. Mark P.

          Actually, there’s a good, cheap way for TPTB to do this.

          Over the last couple of years, there’s been a steady rise in the tide of breathless hype promoting cybercrime — which so far has been mostly DOS attacks and cyber-spying –as ‘cyberwar’ and representing it as a threat comparable to nuclear war, “since it would effect as many people.”

          I’ve heard this from several sources, with no attempt made to address the fact that nuclear weapons could, you know, blow up the world while it’s not necessarily clear just how cyberattacks will manage to kill a single individual (though no doubt they eventually will).

          Obviously, the hype is about the money to be made from defending against cyberwar. However, one of the dastardly things the cyberwar cheering team say that opponents in a cyberwar might do is attack our financial networks.

          So, there the possibility is, ready-made. A false-flag cyberattack done simultaneously on the data centers and systems of at least a couple of the big TBTFs, which ends up destroying much of their electronic records — conveniently including those related to their worst financial incumbencies.

    2. decora

      orrr….people begin dying from starvation and exposure, prompting mass political upheaval, resulting in an armed revolution by the newly-trained-in-warfare vets from afghanistan and iraq, allied with an opportunistic political and ideological class, which cancels the constitution and forms ‘americania’.

  2. Richard Kline

    I would not surmise that there is any advocacy per the public in the gradual death-of-a-thousand-motions we are seeing with regard to the fragmenting of the high level whitewash over the mortgage conveyance mess. To me, what we now have is the emergence and spread of rifts amongst the higher investor class regarding a) who is going to made whole amongst those holding bad paper, and far more importantly b) who is going to end up the the certain death of liability for Pluto sized mountains of plutonium like MBS paper held out there. In short, some in the oligarchy less exposed are trying to pole off the problem onto those more exposed.

    The longer the Phoney Parley goes on pretending that some chicken feed payouts to 1% of mortgage holers harmed in all this will suffice, the more those around the edges of fatally bad mortgage servicing and paper mountains will try to edge out of the picture holding their personal carpet bags of bearer bonds. When that slow slinking turns into a mass bolt for the exits from actual intitutions holding radioactive liability sites the fun will _really_ get underway. I wonder what it will look like when big money decides they can live better without contaminated zombies like BoA, Wells, and their ilk on the loose. Y’know, kill ’em with a headshot and let their liabilities stick to their corpi. That will be a big story in the year coming, I suspect.

  3. Jim A

    What we haven’t seen yet, but probably will is that even when the foreclosure actions are completed, the robosigning cloud over the title can greatly decrease the amount that the banks get when they eventually sell. Yet another way for investors to lose.

  4. lizinsarasota

    I would like to suggest that everyone with a dog in the foreclosure fight read this “white paper,” written by David E. Woolley, in which Mr. Woolley discusses how the MERS mortgage “filter” creates something he terms a “wild title.”
    A wild title has far-reaching implications, not only for the subject property, but all adjoining properties, in that property lines are now open to interpretation/dispute. Mr. Woolley talks about robosigning, forgery, backdating of assignments of mortgages, etc. His Paper is a primer on foreclosure fraud but also a peek into the not-so-distant and very unpalatable future of real estate transactions in America. If a seller cannot convey a clear title, how can a property be sold?
    Bank of America is especially guilty of back-dating assignments of mortgages, and, for every fraudulent assignment, there’s one “wild title” and who knows how many adjacent property owners who are affected. This could take a century to make right.
    Speaking of AGs settling with the banks… You may or may not have heard that the FL AG recently fired the top two attorneys tasked with investigating foreclosure fraud, investigations that were begun by the previous AG, Bill McCollum. Mr. McCollum’s investigations into Lender Processing Services, the notorious robosigning affidavit mill in Jacksonville, and ProVest, a wayward process server company in Tampa, made national headlines in such big-time outlets as the Wall Street Journal.
    After the new FL AG (her name is Bondi) fired these two attorneys, it came out that a week or so before the firings a senior AG staffer had left to be a SR VP of governmental affairs at… Lender Processing Services. You see, Lender Processing Services’ attorneys had taken umbrage at the “aggressive” nature of the two attorneys’ investigation… Then it came out that Bondi had accepted multiple campaign “contributions” from Lender Processing Services, its affiliates/subsidiaries, its in-house counsel, and at least one attorney who works for its in-house counsel. Not only that, she had accepted contributions from the top three guys at ProVest, and one of their wives. All this, while conducting an active, ongoing investigation into these very companies.
    It gets worse. Bondi asked the FL CFO, Jeff Atwater, to head up an independent investigation into the firings. Turns out Atwater also fed at the Lender Processing Services trough, with campaign “contributions” from at least TEN different LPS-affiliated companies from all over the country.
    You tell me: how can the Florida Attorney General, whose entire raison d’etre is to protect Floridians from cheats and scammers, investigate those very cheats and scammers when she’s taken thousands and thousands and thousands of dollars from them? Florida occupies the uneasy position of being the national epicenter of foreclosure fraud: our state’s AG should be in the vanguard of investigating it and prosecuting wherever, whenever, and whoever is involved. How can Ms. Bondi sit at a table with the likes of Mr. Schneiderman and negotiate on Floridians behalf against the banks?
    And, most importantly, what are we going to do about the hundreds of thousands fraudulent real estate-related documents festering in courthouses all over Florida and the rest of the nation, created by the banks? Because of their fraud, the banks have created – “millions” doesn’t seem like a stretch – millions of “wild titles,” an issue we need to clear up before ANY settlement with ANY bank is reached.

    1. problem is

      Excellent analysis in your post lizinsarasota. Thanks for the link to the paper as well.

      In terms of corruption in the Florida AG’s office…

      After watching all the judicial complicity in the foreclosure frauds in Florida courts, the complete failure of any prosecutions or even investigations into fraud by the Wall Street TBTF’s…

      (e.g. the FBI looking everywhere from Florida to San Deigo for million dollar real estate agent frauds and ignoring $$$Trillions in fraud on Wall Street)…

      It must occur to you that the US government, regulatory, financial market, and corporate structures are systemically corrupt from top to bottom…

      1. lizinsarasota

        Yes, it certainly has occurred to me, but it can’t be! We’re AMERICANS. We’re the guys in the white hats, the good guys. We’re the people who slay the dragons and stand up for the little guy. We don’t cheat – we don’t have to. We look down our noses at people in other countries because it’s known they take bribes or kickbacks or whatever you want to call it. We’re better than them. We’re better than THIS.
        When I was a young person, a landscape construction contractor in Atlanta, I worked on large projects, with the very best contractors and subcontractors in town. The referrals I got netted my company jobs that ranged from $60,000 to $250,000. Not once, not one time, did anyone I ever worked with even hint I owed them lunch, much less anything more monetarily substantial. Their ethical behavior gave me the template for every other business relationship I’ve ever had.
        So how do we explain the hundreds of robosigners, who swore to “personal knowledge” in documents witnessed and notarized and filed in court – until they got to court and even then it took two or three trips to tell the truth: they had no personal knowledge. The robosigners, the witnesses, the notaries: they all lied. The lawyers lied, because they knew what was going on. Their clients lied. And the judges, faced with a sudden flood of foreclosure complaints of Biblical proportions – filed on behalf of the same banks by the same law firms using documents signed by the same people – what did the judges think? Does anyone care that the integrity of our court system has been – I was going to say pissed on, but that’s too crude – sullied to the point that you can’t trust an affidavit anymore?
        The bankers, the lawyers, the judges – these are supposed to be among our best and brightest. These are supposed to be the people we’re supposed to look up to. Is anyone going to trust a banker again? I never will! Every time I look at a judge now I wonder if he/she is on the take. The regulators, the politicians… You just have to shake your head.
        One thing’s for sure: we’re all going to die. No amount of money we make or we steal is going to change that. Nothing we buy – with the possible exception of a Porsche 911 – can make us happy. So, what can possibly explain, much less justify, the pervasive fraud we’ve been witnessing and continue to witness?
        Americans are supposed to act better. Americans are supposed to be better. How we find our way back from this precipice I don’t know, and maybe we can’t. One thing’s for sure, though – corruption has no place in American society, and it especially can’t be tolerated in our courts.
        Otherwise, everything falls apart.

        1. Mark P.

          Thanks for your contribution here, Liz. Of course, the principal thing about systemic fraud is that those who don’t go along get fired or quit.

          If you’re a ratings agency employee, for example, who annoys your department manager by noting that those mortgage loans bundled together by a big bank — one that happens to be your company’s biggest customer — are in fact sewage, you’ll need to weigh your honesty against your continued ability to pay for your mortgage, your childrens’ university educations, and like that.

          1. lizinsarasota

            Sweetheart, I’m not trying to sound like a preachy, middle-aged Pollyanna, but at some point you have to decide: am I going to be a Nazi or not going to be a Nazi? When am I unable to simply say: it was my job to do thus-and-so. I’m not guilty, I was just following orders. I have to buy this or afford this…
            What do we teach our children? When is a little bit of cheating OK? It’s OK to spit on someone but not OK to gas them? Is it OK to gas one person but not ten thousand?
            What’s the difference between a robosigner and a Nazi? Is it a fine line or is it a gulf?
            Our country is indeed in the toilet when someone can’t get another job if they quit their robosigning position.

        2. bmeisen

          Thanks Liz – I share your sense of betrayal. A prominent feature of US culture a belief that Americans are inherently good, that Americans deep down are incapable of being bad, unless of course something really terrible happened to you when you were a kid. We believe we are good the way some people use chopsticks.

          Accounts for this (flawed) belief tend to cite democracy, capitalism, and christianity. In addition the culture has assembled a propaganda apparatus that deters members of the culture from experiencing objectivity. For example, how many reports have you seen on the news comparing vacation days education costs and health benefits across countries.

          All cultures have a degree of ethnocentricity and some cultures are profoundly isolated. The US may be the most profoundly isolated of them all.

        3. reslez

          The system is working as designed. The distress you feel is dissonance between the fairy tale and the reality of the hierarchy in which we live. Average citizens are expected to follow a code of personal morality. The parasite financial elite and their hangers on — such as the lawyers, judges, and bankers you list — follow their own self-interest. Society, including the fairy tales you mourn, is arranged for their convenience.

          The more people who figure this out the fewer will cooperate, and some may decide to act as unethically as the elites do.

        4. Elizabeth

          I loved your rant, lizinsarasota. It’s not out of line at all. I have never been under the illusion that my country is, in total, that much better than others, but I was under the very big illusion that it was a sovereign state under the rule of law. “Systemic corruption” doesn’t even begin to cover it. It comes from the top, from people who run their very big “too big to fail” institutions, and by extension the whole nation, like organized crime rings as a matter of course. It is literally the fall of an empire. Where is the outrage?

          Am I dreaming, or are we really talking about the end of PROPERTY RIGHTS on this blog?

      2. Rob

        You are absolutely correct. The whitewashing by the Department of (In)Justice begins with dropping criminal investigations into WAMU, IndyMac Bancorp, and New Century… Remember, mortgage fraud is a FELONY, and it was committed millions of times by the “respectible” loan officers/underwriters of the “respectable” banks. This just published a few days ago by the Wall Street Journal.

        Federal criminal investigations of IndyMac Bancorp and New Century Financial Corp. have stalled and could result in no charges being filed, said people familiar with the situation.

        Separately, the U.S. Attorney’s office in Seattle announced Friday it had closed its investigation of Washington Mutual Inc., another failed mortgage lender, with no criminal charges being brought.

        The three separate investigations, among the first to weigh criminal charges against the companies and their executives at the heart of the housing crisis, each hit major stumbling blocks. The WaMu probe had been inactive for more than a year

        (read more with online subscription)

    2. Alice

      Thank you for the link liz. I helped a friend research the title on her home going back to 1880 when the property was acquired from the usg. The journey was incredible, the deeds were handwritten and a few missing but we were able to find them. We did this because of a claim by a neighbor for adverse possession on her property to get them to a 12 foot ‘wagon road’. They needed this access to the ‘wagon road’ because their property was landlocked and couldn’t be developed without access. Two title companies involved and three attorneys. She lost her property to the developer of course but the point is we were able to research it right up to the time she bought it. Now the title is forever clouded due to Mers. No one will be able to do what we did again.

    3. Alex

      I’ve read this paper and it makes sense to me. However my ability to critically read this via legal/surveying knowledge is minuscule. Does anyone with good knowledge of real estate law have anything to say on this? Yves, could you address this issue at some point, or find someone who can address this issue?

  5. readerOfTeaLeaves

    The FT report on quoted some hyperventilating hysteria from BNY Mellon. The bank accuses the AG of not comprehending the role of the trustee (!).

    1. Yves Smith Post author

      Guess Bank of NY is taking exception to the PSA filed as an exhibit to the case, and the zillions of others it signed? This is gonna be interesting.

      I suspect Bank of NY is objecting to being characterized as having a fiduciary duty (securitization trusts are thin form corporate trusts). I would suspect Schneiderman is thorough and NY law on trusts goes back over 100 years, tons of litigation and key precedents in the Gilded Age. So they may not be able to escape that construction in this state (since pretty much all the Countrywide trusts elected NY as governing law).

      1. readerOfTeaLeaves

        BNY Mellon to media: ” the AG is wrong to claim we have any fiduciary responsibility!”

        Popcorn time ;-)

      1. ambrit

        My money’s on “them” finding photos of the AG as a young man at the Stonewall Riot. (And not in uniform either.)

    1. Up the Ante

      O.C.C.-type preemption, who predicted that?

      “No doubt JSOC is training his lone nut now.”

      If you’re referring to John Walsh’s successor, yes.

  6. Alice

    This is a wonderful thing. The people of New York should be very proud of their a.g. Mr. Schneiderman is a Hero and has few equals. The end is near for BofA.

    1. Nathanael

      We are proud of him, thank you.

      It’s a pity he has to fight our own Governor Andrew Cuomo, and the entire US Government….

  7. LAS

    I have nothing but respect for the NY State Attorney General’s office. This is certainly a very difficult case for them, requiring a lot of investigative time and money out of their finite budget, but it is gratifying they are taking it on. And facing an army of the most weasley defense lawyers no doubt.

    Thank you, Yves, for helping us all to better understand what is going on. I’ll read this post again, even more carefully tonight after work; want to get whole technicolor picture and be sure it is occasion to dance around the living room. If we have to live through a second depression … better be some biz practices around here changed while we’re at it.

  8. Francois T

    As we read this excellent post, you can bet your last n’gwee that a highly paid team of detectives and “security operatives” are going through the life of the NY AG and all his assistants with an atomic microscope.

    If they can’t find anything bad, they’ll make something up.

    Moreover, after that Sonny Sheu affair, it should go without saying that NY AG must benefit from top notch close range personal protection.

  9. Paul P

    The certifications open up BoA to Civli Rico liability for treble damages. I haven’t heard anything about this.

    1. ambrit

      Mr P;
      You probably won’t either until the DOJ gets an ‘uncaptured’ head. (Or gives it, I’m not sure. Am I confusing the DOJ with the CIA?)

  10. monday1929

    “Widespread Fraud” Those two words are a very Big deal.
    As someone noted, the banks’ corporate “security” people will paint a target on the AG. I hope he is clean.

    Pam Bondi is a serious candidate for an “accident”, or suicide. She should make a deal soon and get witness protection. She knows far too much about people who kill without a second thought.

    1. Dan

      That’s some pretty wild conspiracy theories there, and backwards to boot. Bondi is getting paid to cover for LPS, not working to expose them. She’s in place due to the tea-party types taking control of Tallahassee. “Accidents” don’t happen to allies unless they turn on you.

      1. Up the Ante

        “Bondi is getting paid to cover for LPS, not working to expose them. She’s in place due to the tea-party types taking control of Tallahassee. ”

        If that’s the case then Florida’s in even worse shape than they appear.

        Tea Party standing on its head, approving of mortgage corruption, backing an AG facilitating fraud.

        We appear to have found the Anonymous-characterisation, and it’s the Florida AG.

  11. Tom Parsons

    Thanks, Yves, for all this good info and analysis!

    I’m wondering if the following item from your post is a clear signal that BofA is already getting the papers ready for bankruptcy:

    “A side-letter agreement appended to the Proposed Settlement expands the benefit of the PSAs’ indemnification provisions by having BoA, now Countrywide’s parent company, expressly guarantee the indemnification obligations of Countrywide.”

    This sounds like a move to toss those Countrywide obligations down gurgler, as soon as they are recognized by the courts to be BofA’s, and BofA becomes officially excused from making good on them.

    Death watch indeed.

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