NY judge finds Flagstar liable for $90.1 mln in mortgage case

NEW YORK Tue Feb 5, 2013 6:29pm EST

NEW YORK Feb 5 (Reuters) - Flagstar Bancorp Inc was ordered on Tuesday to pay $90.1 million to bond insurer Assured Guaranty Ltd in a contract dispute over loans underlying $900 million in mortgage-backed securities.

The ruling was issued by U.S. District Judge Jed Rakoff in Manhattan following a bench trial last year.

Assured had sued Flagstar over guarantees it provided for the securities, which turned sour as the housing market imploded.

The closely watched lawsuit has been seen as a test of the ability of bond insurers to hold banks accountable for losses incurred insuring securities at the heart of the financial crisis.

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