Think Bank of America is regretting the day it decided to salvage Countrywide? The acrid aftertaste of that acquisition just got a little worse with the news that Allstate Corp has sued BofA and 18 other defendants, alleging losses on more than $700 million of mortgage securities Allstate purchased from Countrywide.
Allstate said that starting in 2003, Countrywide quietly decided to boost market share by approving any mortgage product that a competitor was willing to offer, in a “proverbial race to the bottom.” It said Countrywide then passed on the added risks to investors who bought debt backed by the mortgages.
“Defendants knew the loans offloaded onto Allstate were a toxic mix of loans given to borrowers that could not afford the properties, and thus were highly likely to default,” reads part of the 150-page complaint filed Monday.
Included in the list of defendants is former Countrywide CEO, oddly orange-tinted bastard Angelo R. Mozilo.
Allstate seeks to rescind its purchases of the securities, as well as unspecified damages.