As a proximate result of the foregoing concealment by Defendants, California property values have precipitously declined and continue to decline, gravely damaging Plaintiffs by materially reducing the value of their primary residences, depriving them of access to equity lines, second mortgages and other financings previously available based upon ownership of a primary residence in California, in numerous instances leading to payments in excess of the value of their properties
The Second District California Court of Appeal isn't buying the argument. It granted Countywide's petition to overturn a trial court ruling overruling its demurrer to the plaintiffs' fraudulent concealment allegation:
We conclude the plaintiffs/borrowers cannot state a cause of action against Countrywide for fraudulent concealment of an alleged scheme to bilk investors by selling them pooled mortgages at inflated values, the demise of which scheme led to devastated home values across California. Due to the generalized decline in home values which affects all homeowners (borrowers of Countrywide, borrowers who dealt with other lenders, and homeowners who owned their homes free and clear), there is no nexus between Countrywide‘s alleged fraudulent concealment of its scheme to bilk investors and the diminution in value of the instant borrowers‘ properties.
In other words, the court is saying, the conduct of a single lender -- even one like Countrywide that had a major segment of the pre-meltdown residential mortgage market in California -- can't be blamed for popping the real estate bubble. It's also impliedly stating that lots of lenders threw underwriting standards to the wind, so no single mortgage lender can be blamed for the resulting crash.
The full ruling can be viewed here.