The Corporate World - Written by Beasley Allen on Thursday, February 9, 2012 7:40 - 0 Comments
As a result of a ruling by a New York state court judge, it will be much easier for the bond insurer MBIA Inc. to pursue its $1.4 billion lawsuit accusing Bank of America Corp.’s Countrywide Financial unit of fraudulently inducing it to insure risky mortgage-backed securities. New York State Supreme Court Justice Eileen Bransten ruled last month that in order to show fraud, MBIA need only show Countrywide misled it about the $20 billion of securities it insured, not that the misrepresentations caused its losses.
MBIA accused Countrywide of misrepresenting the quality of underwriting for about 368,000 loans backing 15 financings it insured between 2005 and 2007, while the housing market was booming. MBIA said it would not have provided insurance on the agreed terms had it known how the loans were made. While not ruling on the merits, Judge Bransten lowered the burden of proof on MBIA to show Countrywide committed fraud and breached its insurance policies. Judge Bransten wrote that:
No basis in law exists to mandate that MBIA establish a direct causal link between the misrepresentations allegedly made by Countrywide and claims made under the policy.
Judge Bransten also said MBIA may try to prove financial damages, while agreeing with Countrywide that it “will not be an easy task.” The judge rejected Countrywide’s argument, however, that MBIA’s only remedy was to void its insurance policies. MBIA had said that would be unfair to investors. Bank of America has lost one of its key defenses in the ongoing litigation over mortgage putbacks by the monoline insurers. Judge Bransten issued a similar ruling last month against Countrywide in a case brought by another insurer, Syncora Holdings Ltd’s Syncora Guarantee unit.
Bank of America has had lots of mortgage–related problems since it bought Countrywide in 2008. In a November regulatory filing, Bank of America said unresolved litigation could “significantly” boost costs and materially impact future results. It also said that, through Sept. 30, it had resolved about half of the $6 billion of fraud and warranties claims tied to monoline-insured transactions, including $2 billion in an April settlement with Assured Guaranty Ltd. MBIA meanwhile was restructured by New York’s insurance department in 2009 after the company, which traditionally insured municipal bonds, incurred big losses from insuring mortgage debt. Bank of America and some other banks are challenging that restructuring.
Source: Insurance Journal
Leave a Reply
- An Update on the Firm's Mass Torts Litigation
- Eight Car Makers Join in the Recall of Exploding Airbags
- The Deepwater Horizon Claims Program is Up and Running Again
- Favorite Bible Verses
- J&J Pays Oregon $4 Million To Settle Hip Implant Marketing Claims
- MF Global Officers’ Defense Cost Already At $48 Million
- GSK Fined Record $489 Million For Bribery In China
- Bank Of America’s Mortgage Backed Securities Settlement Is The Most Consumer Friendly Deal Struck Thus Far
- Alabama Supreme Court Affirms Class-Action Status For $3.2 Billion Investor Lawsuit Against CVS Caremark
- U.S. Senate Confirms Jill Pryor To 11th Circuit
- Alabama Campaigns Move Slowly Towards November
- The National Scene Begins To Generate Interest
- United Kingdom’s Government Backs BP
- U.S. Chamber Sides With Foreign Oil Company Over Its Own Members
- Halliburton Reaches Settlement On Claims
- A Confirmation Of Judge Barbier’s Ruling That BP Was Grossly Negligent
- I have worked for dollar general for 14 1/2 years. sept 29th me and my whole cre...
- I had the same ignition problem where the car would not turn off on my 2007 HHR ...
- my recall was just preformed and power steering has gone out. are these two issu...
- I would like to know if I have A case that your firm would take on. I had severe...
- If possible, I would love to join the class action law suit.
We own a 2004 F 35...
- I am wondering about this lawsuit. What the outcome is....
- You can find more information about Lipitor and its connection to Type 2 diabete...
- Doug Godberson and Jerry Leckness, regardless of the brand of tires, you should ...
Recent Settlements - Feb 9, 2012 7:09 - 0 Comments
More In Recent Settlements
- A Further Update On The AWP Litigation
- Firm Reaches Settlement In Fort McClellan Radio Tower Collapse Case
- Firm Reaches Settlement In Sikorsky Helicopter Crash
- The Philadelphia Story
- St. Croix, Virgin Islands Settlement
Product Liability - Oct 2, 2014 13:14 - 0 Comments
More In Product Liability
- NHTSA Looking Into Ford Fiesta Door Latch Problems
- NHTSA Looks At Chrysler Minivan Stalling Issue
- NHTSA Puts Blame on GM For Hiding Ignition Switch Defect
- Aurora Shooting Victims Sue Ammunition E-Retailers
- Children’s Clothing Should Never Be Fire Traps
Recalls Update - Oct 2, 2014 9:39 - 0 Comments
More In Recalls Update
- FDA Tells Compounder To Recall Contaminated Goods Again
- More Than 200,000 Pairs Of Children’s Sunglasses Recalled
- Cabrinha Recalls Kiteboarding Control System Due To Risk Of Injury
- iDevices Recalls Temperature Probes Due To Ingestion Hazard
- AmTRAN Video Recalls To Repair 42-Inch JVC Flat Panel Televisions