This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
See Cramer's multi-million dollar portfolio for FREE and get his new book Get Rich Carefully! Learn More

Bank of America Drops on Mortgage Buyback Woes

NEW YORK (TheStreet) -- Some high-profile mortgage-bond investors reportedly want their money back from Bank of America (BAC) as pressure intensifies on large mortgage servicers to take back loans that are going bad.

On Monday, a group of institutional investors represented by Gibbs & Bruns LLP said they had sent Bank of America a letter asking that it repurchase $47 billion worth of MBS. On Tuesday afternoon, a Bloomberg report indicated that the Federal Reserve Bank of New York, Pacific Investment Management Co. (Pimco),BlackRock (BLK), TCW Group and MetLife (MET) may be among those seeking buyback relief.

>>Bank of America Eyes Mortgage Buybacks

The news came after Bank of America detailed its buyback exposure of nearly $13 billion in a conference call that morning. It also helped send stocks down sharply in afternoon trading, with the Dow Jones Industrial Average plunging more than 200 points and BofA shares down 2.8% at $12.

The Bloomberg report said Pimco, the New York Fed and BlackRock sent a letter to Bank of America this week seeking to "force" the bank to buy back bad loans. The debt in question had been packaged into a $47 billion mortgage-bond securitization by Countrywide Financial before it was acquired by BofA.

During Bank of America's conference call, CFO Chuck Noski referred to a "letter" management had recently received from eight investors.

"In our capacity as the servicer on 115 private label security transactions, we received a letter from eight investors purportedly owning interest in those transactions," said Noski. "The letter asserts breaches of certain servicing obligations including an alleged failure to provide notice of breaches of reps and warranties. While we continue to review and assess the letter and have a number of questions about its content -- including whether these investors actually have standing to bring these claims -- we continue to believe the servicer is in compliance with its servicing obligations."

Noski said the deals had an original balance of $104 billion, which now stands at $46 billion due to prepayments and defaults.

"We will continue to closely monitor the activities of this group and other developments," he added.

The Bloomberg report, which cited anonymous sources, indicated that TCW may join BlackRock in its actions. It also said that MetLife is part of a group represented by the law firm Gibbs & Bruns LLP, which is pursuing action on buybacks from the Countrywide division.

A Bank of America spokesman did not immediately respond to a request for comment; a Pimco spokesman said the firm would not comment on the matter.

-- Written by Lauren Tara LaCapra in New York.



>To contact the writer of this article, click here: Lauren Tara LaCapra.

>To follow the writer on Twitter, go to http://twitter.com/laurenlacapra.

>To submit a news tip, send an email to: tips@thestreet.com.

Stock quotes in this article: BAC 
Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
DOW 16,501.65 -12.72 -0.08%
S&P 500 1,875.39 -4.16 -0.22%
NASDAQ 4,126.9670 -34.4910 -0.83%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto
Advertising Partners

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs