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Structured Finance Litigation Blog

Israeli Bank Sues Bank of America Over $721 million in RMBS

Posted in Bank Hapoalim BM, Bank of America, Countrywide Financial, Merrill Lynch

On March 30, 2012, Israel-based Bank Hapoalim BM sued Bank of America and several of its subsidiaries over alleged misrepresentations regarding more than $721 million in residential mortgage-backed securities (RMBS) that Bank Hapoalim purchased. Bank Hapoalim alleges that Bank of America and its units – Countrywide Financial Corp., and Merrill Lynch & Co. – knowingly misrepresented the underwriting standards used in the mortgage loans that were bundled into the RMBS sold to Bank Hapoalim. According to the summons with notice, Bank of America misrepresented important characteristics of the underlying mortgage loans, including their loan-to-value ratios, the percentage of properties occupied by the owners, and the securities’ credit ratings. The summons with notice includes causes of action for common-law fraud, fraudulent inducement, negligent misrepresentation, aiding and abetting fraud, declaratory judgment, and contract claims, including rescission, restitution and mutual mistake. The case is captioned Bank Hapoalim BM v. Bank of America Corp., et al., case number 651022/2012, in the Supreme Court of the State of New York, County of New York. Read the summons with notice here.