Bank of America, AIG Settle Suits on Defaulted Loans
Bank of America Corp. and American International Group Inc. settled two consolidated lawsuits over defaulted Countrywide Financial mortgage loans for which AIG had refused to pay insurance claims.
AIG’s United Guaranty unit and Countrywide, acquired by Bank of America in 2008, today asked a federal judge in Los Angeles to dismiss all remaining claims and counterclaims with each side bearing its own costs and lawyer fees. Terms of the confidential settlement were not disclosed.
Bank of America sued United Guaranty in March 2009, claiming $43 million in damages from the AIG unit’s refusal to pay claims for defaults on loans that were part of 11 mortgage- backed securities. United Guaranty filed a separate suit days later, alleging Countrywide had misrepresented its underwriting standards for the loans.
Because of an unprecedented number of defaults in the mortgage loans, United Guaranty has already paid more than $30 million in insurance claims on the loans and was exposed to additional claims of “several hundred million dollars more,” United Guaranty said in its complaint.
The case is United Guaranty Mortgage Indemnity Co. v. Countrywide Financial Corp., 09-01888, U.S. District Court, Central District of California (Los Angeles.)