Economy

Eugene

(67,091 posts)

19. Ambac sues Bank of America over Countrywide mortgage bonds

Wed Dec 31, 2014, 09:06 PM

Dec 2014

Source: Reuters

Ambac sues Bank of America over Countrywide mortgage bonds

BY JONATHAN STEMPEL
NEW YORK Wed Dec 31, 2014 2:13pm EST

(Reuters) - Ambac Assurance Corp sued Bank of America Corp to recoup hundreds of millions of dollars of losses from insuring roughly $1.68 billion of securities backed at least in part by risky mortgages from the bank's Countrywide Home Loans unit.

In a complaint filed on Tuesday in a New York state court in Manhattan, Ambac accused Countrywide of lying about how well it underwrote so-called "pay option adjustable-rate mortgage negative amortization" loans that backed the securities.

The securities were issued in eight transactions between 2005 and 2007, Ambac said.

Ambac said it faced potential claims exceeding $600 million as of Oct. 31, and that pools of loans supporting its insured certificates had suffered $3.07 billion of losses by Nov. 30. It also said it would have never guaranteed payments had it known of Countrywide's deception.

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