NEW YORK - (Mealey's) Bank of America Corp. and its
Countrywide Home Loans Inc. affiliate will pay $375 million to a financial
guarantee insurer to settle claims that Countrywide misrepresented the
standards used in underwriting mortgage loans that served as the basis for five
securitizations of mortgage-backed securities, according to a press release
issued July 18 (Syncora Guarantee Inc. v. Countrywide Home Loans Inc.,
No. 650042/2009, N.Y. Sup., New York Co.).
According to the press release, which was issued by
holding company Syncora Holdings Ltd. (the Company), parent company of Syncora
Guaranty Inc., Countrywide Home Loans, Countrywide parent company Bank of
America Corp. and two other Bank of America subsidiaries have agreed to pay the
$375 million in exchange for release of all claims against them.
"In addition, in an effort to terminate other
relationships between the parties, the Company transferred assets to
subsidiaries of Bank of America Corporation and subsidiaries of Bank of America
Corporation transferred or agreed to transfer to the Company certain of the
Company's and Syncora's preferred shares, surplus notes and other securities,"
according to the press release, which is available online at http://phx.corporate-ir.net/phoenix.zhtml?c=198015&p=irol-newsArticle&ID=1715608&highlight=.
Syncora Guaranty sued Bank of America, Countrywide Home
Loans, Countrywide Securities Corp. and Countrywide Financial Corp. in the New
York County Supreme Court, alleging that the defendants misrepresented the
standards used in underwriting mortgage loans that served as the basis for
"four securitizations of home equity mortgage loans (HELOCs) and one
securitization of closed-end second originated by Countrywide and insured by
In particular, Syncora Guaranty contends that the
defendants "represented to Syncora that Countrywide had acted prudently and
responsibly in underwriting the loans: among other things, Countrywide
represented to Syncora that the loans in the portfolios conformed with its
published underwriting guidelines and that it knew nothing about the loans that
would cause a reasonable underwriter to conclude they would default.
These representations were false."
Syncora Guaranty stated claims for fraudulent inducement,
negligent misrepresentation, breach of contract, breach of the implied duty of
good faith and fair dealing, indemnification and successor and vicarious
Syncora Guaranty is represented by Mark P. Goodman,
Donald W. Hawthorne, John S. Craig and Felix J. Gilman of Debevoise &
Plimpton in New York.
The defendants are represented by Mark Holland of Goodwin
Procter in New York and Sarah Heaton Concannon
of Goodwin Procter in Boston.
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