Oregon Sues Countrywide over Pension Fund Losses

According to the announcement, the Oregon Public Employee Retirement Fund was induced to invest $200 million into home loans originated by Countywide, and lost $29 million as a result of misrepresentations by Countrywide and its financial underwriters, the lawsuit says. The lawsuit, filed in federal court in California, accuses Countrywide of violating securities law by making statements to investors that were materially false and misleading because they misrepresented and/or failed to disclose information crucial to investors’ ability to accurately assess the risks of their investments.  

With the action, Oregon is partnering with the Iowa Public Employees’ Retirement System, which is the lead plaintiff in the case. Other plaintiffs include the General Board of Pension and Health Benefits of the United Methodist Church and the Orange County Employees’ Retirement System.  

The suit says that Countrywide provided documents that falsely claimed that all the mortgage loans held in the investment fund met accepted underwriting standards for evaluating prospective buyers’ credit history and ability to repay the loan when in fact they did not. Countrywide also falsely claimed that its appraisals met acceptable standards designed to insure that the value of the property was adequate collateral for the mortgage, the announcement said.