U.S. District Judge Mariana Pfaelzer dismissed a lawsuit against Bank of America Corp, which claimed that its Countrywide Financial unit had made false statements about loan origination practices in selling MBS's, or mortgage backed securities.  The suit claimed documents for mortgages originated by Countrywide and later securitized contained misrepresentations and omissions, and didn’t follow the lender’s own guidelines.

The judge said in her ruling that investors didn’t sufficiently demonstrate they suffered an injury for the securities they bought, and that the statute of limitations had expired for some claims.  Those failings must be addressed in the new complaint.  Accordingly, the judge gave investors who brought the complaint 30 days to revise it.  After the complaint is refiled, the court “will consider further the other grounds” in the bank’s motion to dismiss it. 

BofA reportedly said that, because the judge’s ruling narrows the scope of claims that would be allowed to proceed in a revised complaint, it expects the securities at issue in the case would decline from 427 offerings with a face value of about $352 billion to about 22 offerings valued at about $31 billion. 

The case is Maine State Retirement System v. Countrywide Financial Corp., 10-cv-00302, U.S. District Court, Central District of California (Los Angeles).   [Bloomberg, 11/8]