Bank of AmericaÂ (NYSE: BAC) has reportedly suffered a setback in its effort to put off insurer MBIA Inc.Â (NYSE: MBI), which is seeking billions of dollars over soured home-mortgage loans issued by BofA's Countrywide Financial unit.
BofA and MBIA have been in litigation since 2008. Bank of America acquired Countrywide in January of the same year for $4.1 billion.
MBIA alleges Countrywide committed fraud by securitizing loans that were riskier than promised. The insurer reportedly says it has paid out more than $3 billion to investors in the securities, to whom it had written policies guaranteeing payments. Bank of America has sought to put financial pressure on resource-constrained MBIA as the case drags on, Reuters reportsÂ â€“ an effort that was weakened by MBIA's moves this week.
BofA aims to delay litigation and push MBIA â€œto the brink of insolvency,â€ Isaac Gradman, an attorney at Perry, Johnson, Anderson, Miller & Moskowitz LLP in Santa Rosa, Calif., who isnâ€™t involved in the case, told Bloomberg in a separate report. The two litigants appeared before New York state Supreme Court Justice Eileen Bransten, Wednesday.
MBIA recently renegotiated some terms with some of its bondholders, relieving its financially straitened situation, Reuters reported. Bank of America had sought to block that move. Now that it is complete, a settlement is likely, say analysts quoted by Reuters.
Bank of America, the largest bank in Massachusetts by assets, said last week it is buying MBIA bonds. According to Reuters, CreditSights analysts Rob HainesÂ and Eric AxonÂ wrote that the buy could be an effort to conceal the amount of a pending settlement.
Source: Boston Business JournalÂ
Mario Pavli Vice PresidentÂ Boston Luxury ResidentialÂ