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MBIA Fraud Suit Against Countrywide to Proceed

MBIA, the mortgage insurer that decided to back all those subprime securities underwritten by Countrywide and others, will now have its day in court.

A judge ruled earlier this week that MBIA can proceed with its fraud claim against Countrywide (now Bank of America.) The insurer claims Countrywide lied when it told MBIA the mortgages being insured were “in in strict compliance with its underwriting standards and guidelines.”

The court battle should produce some interesting evidence of how Countrywide underwrote thousands of mortgages during the housing boom. We’re sure to see more example like these from another legal dispute involving the once-giant mortgage originator.

We’re also likely to learn, from Countrywide/BofA’s defense team, how much MBIA really understood about the underwriting process. They are sure to claim the insurer was well-aware of the practices, including no-doc and stated income loans, that were prevalent during the boom.

MBIA’s Fraud Claim Against Insurer Can Proceed [Bloomberg]


Why Can't MBIA Understand That BofA Was Only Buying The Good Parts of Countrywide?

Was the "worst merger in Wall Street history" a merger at all?

Angelo Mozilo: Countrywide Was The Cadillac Of Mortgage Lenders

In June 2008, Countrywide founder and CEO Angelo Mozilo stood before a group of CFC shareholders and, through salty tears, told them that Bank of America would "reap the benefits of what we have sowed." He wasn't kidding, and in the 4+ years since Ken Lewis paid $4 billion for the place, BofA has had the pleasure of ponying up an additional $40 billion (and counting) in write-downs and legal fees associated with cleaning up Countrywide's messes, while CEO Brian Moynihan has publicly described the acquisition as an albatross around his neck. Additionally, Ang Moz forked over $67.5 million in 2010 to "resolve SEC claims that he misled investors," and separately, there has been talk by some that Countrywide contributed in no small way to the worst financial crisis since the Great Depression. In light of all that, does Ang Moz, have any regrets about the way his company was run? Not a fucking one and if he had to do it all over? He wouldn't change a thing.