ResCap Sues B of A, RBC Mortgage Over 'Defective' Loan Sales
Residential Capital LLC, the defunct mortgage company, sued Bank of America NA, RBC Mortgage Co. and other lenders, claiming they sold it poor-quality loans that led to its bankruptcy.
ResCap filed for bankruptcy protection in May 2012 after investors who bought mortgage-backed bonds claimed they were loaded with faulty loans. It was liquidated to resolve more than $100 billion in potential lawsuits.
In lawsuits filed yesterday in U.S. Bankruptcy Court in Manhattan, ResCap said itís seeking to recover "billions of dollars in liabilities and losses" over the "defective" loans. It wants the banks held responsible for more than 24 lawsuits alleging ResCap securitized bad loans, as well as for hundreds of claims, including securities fraud and breach of warranty, that it faced in bankruptcy.
Bank of America is a successor to First Republic Thrift & Loan and First Republic Savings Bank, which sold ResCap more than 240 mortgage loans with a principal of over $165 million, according to one of the filings.
A Bank of America spokesman, T.J. Crawford, didn't immediately return a call seeking comment on the suit.
The banks are "legally and contractually responsible for the liabilities and losses caused by the poor quality of the mortgage loans in question," ResCap said.
Also sued were Summit Financial Mortgage LLC, CMG Mortgage Inc., Primary Capital Advisors LLC, Honor Bank, Cadence Bank NA, Citizens First Wholesale Mortgage Co., First Mariner Bank, Mortgage Investors Group Inc., Synovus Mortgage Corp. and PHH Mortgage Corp.