MBIA Sues Countrywide Over HELOC/CES Insurance
Financial Times is reporting that MBIA is suing Countrywide over false representations of insurance on HELOC and CES.
Like any boom, there is massive fraud committed near the peak of the bubble. The question is whether courts will rule in favour of the bond insurers. In other types of insurance, insurance companies easily void fraudulent cases. But US housing was totally out of control and it's not clear who is actually at fault. In any case, bond insurers pay first and only recover it later.
Thanks to the Yahoo MBIABK message board (requires free registration) for bringing this to my attention.
MBIA Insurance is suing Countrywide Financial, alleging that the mortgage lender fraudulently induced MBIA to guarantee billions of dollars of Countrywide mortgage bonds that have cost the embattled bond insurer more than $459m.
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MBIA said in its complaint that Countrywide had “falsely represented” to both MBIA and investors that mortgage loans packaged into the guaranteed bonds had been originated in strict compliance with its underwriting standards.
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The bond insurer is suing over guarantees it provided for $14bn of Countrywide mortgage bonds that packaged home equity loans and second lien mortgages originated between 2005 and 2007.
Like any boom, there is massive fraud committed near the peak of the bubble. The question is whether courts will rule in favour of the bond insurers. In other types of insurance, insurance companies easily void fraudulent cases. But US housing was totally out of control and it's not clear who is actually at fault. In any case, bond insurers pay first and only recover it later.
Thanks to the Yahoo MBIABK message board (requires free registration) for bringing this to my attention.
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