By Guest Author - January 3rd, 2012, 4:32PM
“Bank of America Corp. may face billions of dollars more in liability for faulty mortgages if a judge agrees with insurer MBIA Inc. that the lender must buy back loans even if the errors didn’t cause a borrower’s default…If New York Supreme Court Justice Eileen Bransten and judges in similar cases across the country rule that the issue of “causation” doesn’t apply — meaning it’s enough to show that the loan was improperly made — it “could significantly impact” Bank of America’s potential costs, the bank said in a regulatory filing this month…
Such court defeats may add as much as $9 billion to what Bank of America owes bond insurers, according to hedge fund Branch Hill Capital, which is betting against its stock and has invested in MBIA. A victory for Armonk, New York-based MBIA may also strengthen claims by mortgage-securities investors
http://www.ritholtz.com/blog/2012/01/mbia-vs-bac-on-why-the-loss-causation-ruling-is-important/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+TheBigPicture+%28The+Big+Picture%29
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