Allstate is suing Bank of America and its Countrywide Financial division over Countrywide's sale of $700 million in mortgage-backed securities to the insurance giant, alleging that Countrywide knew in advance that the assets would drop in value because of a high percentage of defaults.
Bank of America challenges testimony by one of its operational leaders -- that Countrywide may have held on to homeowners' notes that it should have put into a trust. But the testimony is reinforcing fears that BofA is in big trouble.
Sworn testimony in a recently concluded mortgage case may spell big trouble for Bank of America. If what one bank employee said proves to be accurate, paperwork problems at mortgage provider Countrywide could leave Bank of America on the hook for billions.
Countrywide Financial Corp. co-founder Angelo Mozilo, along with two others, has reached a settlement agreement with the Securities and Exchange Commission related to charges of insider trading and civil fraud.
Countrywide Financial, once the nation's largest mortgage lender, has agreed to pay $600 million to settle shareholder lawsuits. It's the largest mortgage settlement to come out of the meltdown so far.
Bank of America has agreed to repay $108 million to 200,000 struggling homeowners who were overcharged fees by Countrywide mortgage services companies prior to 2008.