Yesterday Bank of America rebuffed claims by a lawyer for several big investors that it should buy back troubled mortgages because the loans were made improperly. A group of investors, including the Federal Reserve Bank of New York and Pimco are pressing Bank of America to buy back a portion of some $47 billion worth of mortgages. Bank of America argued that the effort would have the effect of speeding up the foreclosure process and force it to evict more homeowners. The investors’ claims have become a major worry on Wall Street as the foreclosure crisis has escalated. Bank of America said the problems stemmed from the economic downturn rather than any underlying problem with how the mortgages were sold to investors.
It called the investor claims “utterly baseless.” Signaling a much more aggressive legal stance, the bank also criticized the lawyer behind the effort, K. Patrick. It argued that a letter she wrote last month that was signed by clients was “written for an improper purpose, or in furtherance of an ulterior agenda.” Ms. Patrick did not immediately respond to calls seeking comment. “I don’t think we should be put in a position where we aren’t trying to help homeowners through this strife because people want us to foreclose faster,” said B. T. Moynihan, Bank of America’s chief executive. In addition, Mr. Moynihan said, he was caught off guard by the decision of the Federal Reserve and Freddie Mac, the government-controlled giant, as well as private investors to sign the letter.
