| NEW YORK, April 29
NEW YORK, April 29 Bond insurer MBIA Inc may
pursue its case against Bank of America Corp over toxic
mortgage-backed securities packaged by Countrywide Financial
In decisions made public Monday, New York State Supreme
Court Justice Eileen Bransten denied Bank of America's motion
for a pre-trial ruling that it should not be held liable for
claims against Countrywide.
Bransten also rejected MBIA's summary judgment
motion that Bank of America should assume Countrywide's
liabilities. Bank of America, the second-largest U.S. bank,
acquired Countrywide in 2008.
Bank of America had argued MBIA was seeking a "windfall" by
holding it liable for Countrywide's alleged misrepresentations.
Bank of America said the claims were barred because the bank
paid "fair value" for Countrywide's assets in 2008.
Branstein didn't buy the bank's "fair value" argument.
"Whether fair value is paid for the assets acquired has no
bearing," Bransten wrote in her ruling.
The rulings follow an April 2 New York appeals court
decision that MBIA did not need to wait for loans to go into
default before it could force Bank of America to buy them back.
Bransten did make it easier for MBIA to prove that
Countrywide had an obligation to repurchase the loans.
In the lawsuit, MBIA accused Countrywide of misrepresenting
underwriting on 389,544 residential mortgage loans backing some
$20 billion of securities it insured from 2005 to 2007.
MBIA has said the securities racked up $4 billion in losses.
MBIA spokesman Kevin Brown declined comment on the ruling,
as did Bank of America spokesman Lawrence Grayson.
Bransten's denying MBIA's motion for summary judgment on
successor liability may be viewed as a positive development for
Bank of America in another case.
There had been speculation in the financial community that
if she granted it, it might somehow negatively impact whether a
judge approved a proposed $8.5 billion Bank of America
settlement with investors.
The case is MBIA Insurance Corp v Countrywide Home loans Inc
et al, New York State Supreme Court, New York County, No.