MBIA Inc. (NYSE:MBI) To Proceed With Its Case Against Bank of America Corp (NYSE:BAC)
MBIA Inc.(NYSE:MBI) is likely to pursue its lawsuit against Bank of America Corp(NYSE:BAC) over toxic securities that are supported by mortgage and are packed by Countrywide Financial Corp.
New York Supreme Court Justice Eileen Bransten has denied an appeal from Bank of America to have a pre-trial ruling that it should not be held responsible for claims against Countrywide.
Bransten has also rejected summary verdict motion of MBIA that Bank of America must assume liabilities of Countrywide. Bank of America had bought Countrywide in 2008.
Bank of America has presented argument that MBIA was seeking a bonus by holding it responsible for alleged flawed interpretations of Countrywide. According to Bank of America, the claims were barred since the bank paid fair value for the properties of Countrywide in the year 2008.
Bransten did not accept the fair value argument presented by the bank.
Bransten mentioned in her ruling that whether the fair value is paid for the properties acquired no demeanour.
The verdicts come after a court decision on 2nd April that MBIA did not require to wait for loans to go into non-payment before it could compel Bank of America to buy them back.
Bransten has made it simpler for MBIA to establish that Countrywide is obliged to repurchase the loans.
In the case, MBIA has sued Countywide for distortion of underwriting on 389,544 residential mortgage loans supporting nearly $20 billion of securities that it had insured between the years 2005 and 2007.
MBIA has stated that the securities have translated to losses amounting to $4 billion.
Kevin Brown, a spokesman for MBIA, has refused to comment on the matter. Lawrence Garyson, a spokesman for Bank of America, also declined to comment.
Bransten’s declination of MBIA’s appeal for summary judgment on successor liability can be seen as a positive step for Bank of America in a different case.
Tags: BAC, MBI, MBIA Inc. (NYSE:MBI)