MBIA and Bank of America Settle MBS Litigation for $1.7 Billion

more+
less-

On May 6, monoline insurer MBIA announced that it had reached a $1.7 billion settlement with Bank of America in connection with alleged fraud and breach of contract claims related to Countrywide-issued mortgage-backed securities insured by MBIA. Under the terms of the settlement, Bank of America will make a $1.6 billion cash payment, will transfer back $134 million of MBIA’s securities, and will extend MBIA a $500 million credit line. The settlement ends litigation pending in the Supreme Court for the State of New York since 2008. The agreement also affected other MBIA-issued policies insuring Bank of America’s credit default swaps, and grants Bank of America warrants to purchase approximately 10 million shares of MBIA common stock. The settlement is subject to approval by the New York State Department of Financial Services. Press Release.

Topics:  Bank of America, Breach of Contract, MBIA Insurance, Mortgage-Backed Securities, Settlement

Published In: Business Torts Updates, General Business Updates, Finance & Banking Updates, Securities Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Orrick - Structured Finance Group | Attorney Advertising

Don't miss a thing! Build a custom news brief:

Read fresh new writing on compliance, cybersecurity, Dodd-Frank, whistleblowers, social media, hiring & firing, patent reform, the NLRB, Obamacare, the SEC…

…or whatever matters the most to you. Follow authors, firms, and topics on JD Supra.

Create your news brief now - it's free and easy »