Bond insurer MBIA Inc., which nearly went broke insuring mortgage-backed securities underwritten by Countrywide Financial Corporation, scored a victory on April 2 in its effort to wrest back $1.4 billion from the lender.
The Appellate Division, First Department, ruled in MBIA Ins. v. Countrywide Home Loans, 602825/08, that in order to make Countrywide buy back home mortgages packaged into securities, MBIA only needs to show that it was misled about the riskiness of the loans. Countrywide’s parent company, Bank of America Corporation, had insisted that it only needs to repurchase home loans that defaulted.
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