Judge Rules Against Bank Of America In MBIA-Countrywide Case

Posted by Orb Staff on January 04, 2012 No Comments
Categories : Residential Mortgage

10641_0alawsuit2 Judge Rules Against Bank Of America In MBIA-Countrywide Case MBIA Inc. won a ruling in court against Bank of America Corp. as part of its legal effort to recover losses from mortgages originated by the bank's Countrywide Financial unit.

According to a Bloomberg report, New York State Judge Eileen Bransten ruled that MBIA only needs to show that the bank misrepresented the quality of the loans backing the bonds that the insurer guaranteed, rather than establish that the loans caused the losses that MBIA is seeking to recover.

‘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,’ Bransten wrote in her decision.

MBIA CEO Jay Brown praised the ruling in an email statement. ‘The ruling provides us with a straightforward path to recovery of our losses,’ he wrote.

Lawrence Grayson, a spokesperson for Bank of America, told Bloomberg that the ruling is not a setback for the Charlotte, N.C.-based bank, which purchased Countrwide in 2008.

‘MBIA still must prove that it was damaged by Countrywide's allegedly material misrepresentations, which as the court stated, will not be an easy task,’ Grayson said.

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