A Connecticut based hedge fund is suing Countrywide Financial Corporation over changes it plans to make to thousands of mortgage loans. The fund, Greenwich Financial Services, says it and other investors will lose a significant amount of money if the changes are made. The New York Times reports:
The lawsuit claims that under contracts governing 374 Countrywide mortgage trusts, the company must purchase at face value any mortgage that it modifies. William Frey, president of Greenwich Financial, said an estimated $150 billion in mortgages could be covered by the requirement.
"Their intention is to modify them, and they don't have the right to do that," Mr. Frey said. Though his firm is the only named plaintiff in the case, Mr. Frey said many other investors were supporting his effort and would benefit if the court granted the case class-action status.
Countrywide agreed to modify the mortgages of nearly 400,000 customers in October, after 11 states accused the company of predatory lending.
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