MBIA Settles 5-Year Mortgage Fight With Bank of America
This article is for subscribers only.
MBIA Inc. and Bank of America Corp. settled a five-year legal battle over soured mortgage debt in a deal that will pay MBIA the equivalent of $1.7 billion and give the bank a 5 percent stake in the bond insurer. MBIA shares surged to the highest since September 2008.
The bond insurer will drop demands that Bank of America’s Countrywide unit buy back faulty home loans that MBIA guaranteed, while the bank ends a challenge to a 2009 restructuring of the insurer that was intended to jumpstart its business of backing municipal bonds, the two companies said today in separate statements. Bank of America also will provide the MBIA unit that guaranteed the lender’s mortgage debt a $500 million credit line, the firms said.