NEW YORK - (Mealeys) 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 Tuesday (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 Syncora."
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 liability.
Syncora Guaranty is
represented by Mark P. Goodman, Donald W. Hawthorne, John S. Craig and Felix J.
Gilman of Debevoise & Plimpton in New
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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