SAN FRANCISCO (CN) – The 9th Circuit remanded a class action accusing Countrywide Home Loans of understating the risk of mortgage investments, many of which have become uncollectible.
On behalf of mortgage borrowers, David Luther sued Countrywide and its subsidiaries under the Securities Act of 1933.
Countrywide removed the case to federal court under the Class Action Fairness Act of 2005 (CAFA), which allows the removal of high-dollar lawsuits against diverse defendants.
However, Judge Silverman ruled that the CAFA does not supersede the Securities Act’s specific bar against the removal of state matters that are brought to a state court.
“Because the claim proceeded under state law rather than the 1933 Act,” Silverman wrote, “CAFA did not apply on its terms.”