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Ambac Sues Countrywide Over Mortgage-Backed Bonds
Ambac Assurance Corp. sued Bank of America Corp. over $16.7 billion of mortgage-backed securities, saying the bank’s Countrywide Financial Corp. fraudulently induced Ambac to insure the bonds.
Ambac found that 97 percent of 6,533 home mortgage loans it reviewed across the 12 securitizations sponsored by Countrywide didn’t conform to the lender’s underwriting guidelines, according to the complaint filed in New York state Supreme Court. Many of the loans were made to borrowers with limited or no ability to meet their payment obligations, Ambac said.
Ambac has paid hundreds of millions of dollars in claims connected to defaults in the securities, according to the suit filed yesterday. At the same time, Countrywide has refused to comply in a timely fashion with its obligations to repurchase the out-of-guideline loans or bring them into compliance, the lawsuit claims.
Ambac is “entitled to redress for Countrywide’s massive fraud and pervasive and material breaches, including damages sufficient to place Ambac in the same position it would have been in had it never insured the transactions,” the suit says.
Shirley Norton, a spokeswoman for the Charlotte, North Carolina-based lender, said the bank has no comment.
The case arises out of 12 Countrywide-sponsored transactions that closed between 2004 and 2006, nine of which involve home equity lines of credit secured by second-lien mortgages and three that involve fixed amount second-lien loans.
Over the last two years, the loans in the transactions have defaulted at what Ambac calls “extraordinary rates.” To date, the suit claims, more than 35,000 loans with a total principal balance of more than $1.95 billion have defaulted or been charged off. As a result, the suit says, Ambac has been forced to make more than $466 million in claim payments. www.bloomberg.com/news/2010-09-30/...access-in-court-news.html
Ambac Assurance Corp. sued Bank of America Corp. over $16.7 billion of mortgage-backed securities, saying the bank’s Countrywide Financial Corp. fraudulently induced Ambac to insure the bonds.
Ambac found that 97 percent of 6,533 home mortgage loans it reviewed across the 12 securitizations sponsored by Countrywide didn’t conform to the lender’s underwriting guidelines, according to the complaint filed in New York state Supreme Court. Many of the loans were made to borrowers with limited or no ability to meet their payment obligations, Ambac said.
Ambac has paid hundreds of millions of dollars in claims connected to defaults in the securities, according to the suit filed yesterday. At the same time, Countrywide has refused to comply in a timely fashion with its obligations to repurchase the out-of-guideline loans or bring them into compliance, the lawsuit claims.
Ambac is “entitled to redress for Countrywide’s massive fraud and pervasive and material breaches, including damages sufficient to place Ambac in the same position it would have been in had it never insured the transactions,” the suit says.
Shirley Norton, a spokeswoman for the Charlotte, North Carolina-based lender, said the bank has no comment.
The case arises out of 12 Countrywide-sponsored transactions that closed between 2004 and 2006, nine of which involve home equity lines of credit secured by second-lien mortgages and three that involve fixed amount second-lien loans.
Over the last two years, the loans in the transactions have defaulted at what Ambac calls “extraordinary rates.” To date, the suit claims, more than 35,000 loans with a total principal balance of more than $1.95 billion have defaulted or been charged off. As a result, the suit says, Ambac has been forced to make more than $466 million in claim payments. www.bloomberg.com/news/2010-09-30/...access-in-court-news.html
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