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Paul Ronald vs. Bank of America - Court Closes Door on Another Exotic Theory of Mortgage Liability
The trend in the courts has been to reduce the legal theories available to persons who suffered losses during the mortgage meltdown. Traditional theories based on breach of contract, fraud, and promissory estoppel, remain viable causes of action.
Yet the more exotic theories seeking to impose liability have been narrowed and often eliminated. Such is the case in Bank of America v. Superior Court (Paul Ronald) (August 25, 2011) 2011 DJDAR 12942. In the Paul Ronald action, the plaintiff sought to hold Bank of America, as successor-in-interest to Countrywide Mortgage, liable for the general decline in property values triggered by Countrywide’s bad lending practices. The court would have none of it.
According to the complaint, “Countrywide's founder and CEO, Angelo Mozilo determined that Countrywide could not sustain its business ‘unless it used its size and large market share in California to systematically create false and inflated property appraisals throughout California. Countrywide then used these false property valuations to induce Plaintiffs and other borrowers into ever-larger loans on increasingly risky terms.’
The complaint continued. “Mozilo knew ‘these loans were unsustainable for Countrywide and the borrowers and to a certainty would result in a crash that would destroy the equity invested by Plaintiffs ... more

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