Bank of America to pay Ambac Financial $1.84 billion in lawsuit settlement
2022.10.07 07:44
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© Reuters. A person walks past a Bank of America sign in the Manhattan borough of New York City, New York, U.S., January 19, 2022. REUTERS/Carlo Allegri
(Reuters) -Bank of America and its related entities have agreed to pay Ambac Financial (NYSE:) Group $1.84 billion in a lawsuit settlement, sending the bond insurer’s shares up 8.6% premarket.
The settlement comes a month after the Wall Street’s bank’s attorney said Ambac could not prove its $2.7 billion case against BofA over troubled mortgage-backed securities on evidence that it was a “bad actor” before the 2008 financial crisis.
Between 2004 and 2006, Ambac insured securities backed by Countrywide loans worth $25 billion. The insurer claims 80% of the loans were the product of poor underwriting standards or had other deficiencies that violated insurance agreements, and that Bank of America (NYSE:) failed to repurchase the loans as required.
Ambac sought to recoup more than $2 billion in insurance claims it paid to cover investor losses on securities backed by 375,000 home loans from Bank of America’s Countrywide unit.
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