Federal Judge Certifies Countrywide MBS Class Action

A California federal judge today certified a class action lawsuit in the case against Countrywide that accuses the home mortgage giant of deceptive practices in the sale of billions of dollars in mortgage-backed securities (MBS).

The judge also appointed the Washington, D.C.-based law firm of Cohen Milstein Sellers & Toll PLLC as lead counsel in the case. As such, the firm will give notice to members of the class about the litigation.

“This is a major step in holding Countrywide accountable for misrepresenting the mortgages it was securitizing,” said plaintiffs' lead counsel Steven Toll, of Cohen Milstein. “We are now able to proceed with factual discovery regarding the quality of mortgages that were packaged and sold to investors.”

U.S. District Judge Mariana R. Pfaelzer, of the Central District of California, signed an order certifying class consisting of all persons or entities that purchased MBS from eight groups of securities sold by Countrywide entities before January 14, 2010.

The order came after Countrywide stipulated to a proposed class in conformity with the judge's previous rulings in the case. The agreement by Countrywide and the plaintiffs cut short protracted legal argument over whether the issues to be addressed in this litigation could be resolved on a class-wide basis rather than investor-by-investor.

The class action lawsuit filed in 2010 by several state retirement funds charges that Countrywide used materially false or misleading documents to sell billions of dollars of MBS that were downgraded to junk bond status by 2008.

The class representatives include the Iowa Public Employees' Retirement System, the Oregon Public Employees' Retirement System, the Orange County Employees' Retirement System and the General Board of Pension and Health Benefits of the United Methodist Church.

Plaintiffs in the lawsuit are represented by Steven J. Toll, Julie Goldsmith Reiser, Joshua Devore, Christopher Lometti, Joel Laitman, and Daniel Rehns of Cohen Milstein Sellers & Toll PLLC, of Washington, D.C.

For a copy of the order, visit http://www.cohenmilstein.com/news.php?NewsID=477.

The case is Maine State Retirement System et al., v. Countrywide Financial Corp. et al., case number 10-CV-00302, in the U.S. District Court of the Central District of California.