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Countrywide Wages Tranche Warfare Against Investors’ Claims

Investors who sued over $351 billion in downgraded Countrywide Financial Corp. mortgage-backed securities after the 2007 subprime market collapse may have to settle for less than 1 percent of what they initially sought.

U.S. District Senior Judge Mariana Pfaelzer in Los Angeles, who narrowed the case to $2.6 billion in bonds and dropped Countrywide parent Bank of America Corp. as a defendant, has gone further than other judges in scaling back such claims. Her rulings in April and May show the difficulty of trying to hold banks liable for billions of dollars in debt downgraded to junk.