Bank of America Corp. is appealing a ruling in a fraud lawsuit brought by MBIA Inc., which is fighting to recover losses on home loans made by the bank’s Countrywide Financial unit.
New York State Supreme Court Justice Eileen Bransten ruled Jan. 3 that MBIA need only show Countrywide made misrepresentations about the loans, instead of also establishing they caused the losses the bond insurer is seeking to recover.
Countrywide said in a filing today with the state supreme court that it was appealing the ruling.
MBIA, which sued Countrywide in 2008, guarantees payments to investors that bought securities backed by pools of the lender’s loans. The insurer says the loans were riskier than Countrywide promised, and as they defaulted, the Armonk, New York-based company was forced to make payments.
The case is MBIA Insurance Corp. v. Countrywide Home Loans Inc., 602825-2008, New York State Supreme Court (Manhattan).