MBIA (MBI) Investors Cheer as Judge Rules BofA Must Repurchase Faulty Loans Sold by Countrywide
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Shares of MBIA Inc (NYSE: MBI) closed up 8.11 percent and are trading up an additional 5 percent in the after-hours session Tuesday after winning a summary judgement decision against Bank of America's (NYSE: BAC) Countrywide Financial unit.
The ruling requires BofA to repurchase faulty home loans which were sold by Countrywide.
Management at MBIA presented information indicating Countrywide made misrepresentations about the loans backing the bonds and was not forced to show evidence the loans were a direct result of the losses in which the insurer is looking to recover.
New York state Judge Eileen Bransten stated in her decision, “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.”
The ruling requires BofA to repurchase faulty home loans which were sold by Countrywide.
Management at MBIA presented information indicating Countrywide made misrepresentations about the loans backing the bonds and was not forced to show evidence the loans were a direct result of the losses in which the insurer is looking to recover.
New York state Judge Eileen Bransten stated in her decision, “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.”
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