Bank of America hit with setback in MBIA Insurance mortgage liability lawsuit

[tomm2thumbs]

Source: Washington Post

The bank lost a major procedural ruling in a lawsuit over its liability for allegedly toxic mortgages. The ruling will make it harder for the bank to defend itself in that case, and it could set a standard for similar disputes.

Bank of America had tried to set a high bar for plaintiff MBIA Insurance by requiring that the files for each of 368,000 or more disputed loans be evaluated individually. That process would have cost MBIA $75 million, and it would have taken a team of 24 people more than four years, MBIA estimated.

For the bank, it was "the next best thing to avoiding trial altogether," MBIA argued.

Instead, the New York State Supreme Court in late December declared that MBIA can pursue its case by focusing on a statistical sample of 6,000 disputed loans. That could pave the way for a trial to proceed as scheduled in 2011.

"It's a big setback" for Bank of America's "scorched-earth strategy," said David J. Grais, a lawyer involved in other suits against the bank.

Read more: http://www.washingtonpost.com/wp-dyn/content/article/2010/12/31/AR2010123101728.html?hpid=moreheadlines

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"Bank of America" - the most useless three words I've uttered all year - and that's a full 365 days worth

[tomm2thumbs]

1. I loved the Justice's thinking about sampling - she notes:

...statistical sampling is generally accepted, and she cited an appeals court decision from 1856 saying it was acceptable to draw conclusions about 14 bales of cotton based on just several.

[boppers]

5. They came up with an estimated 91% irregularity estimate.

"An MBIA review found that 91 percent of defaulted or delinquent loans in 15 Countrywide pools "show material discrepancies from underwriting guidelines," MBIA said in its lawsuit."

That shouldn't be too hard to prove, or disprove, or clarify, from a reasonable sample.

That being said, this is still just two companies that both failed to do due diligence arguing over who should pick up the tab for their mutual failures.

[xchrom]

2. Good. I hope it 'leaves a mark' as they say. Nt

[Roy Rolling]

3. trade off

Okay B of A, if you you want to evaluate each file individually put a hold on foreclosure on each of those mortages until all can be completed.

[dballance]

4. Good for the Court Ruling! BofA Sucks

They need to be held responsible for their actions.

[sarcasmo]

6. Glad I moved our money that snake pit.

[lonestarnot]

7. Good!

[InkAddict]

8. Is it any wonder why BOA bought into Mozilla's mortgage

warehousing racket...The language in CW's paperwork even in the early 90s assured no possible means struggling mortgagees would hold onto their properties...let alone the initial steering re-fi's into sub-prime tranches nor the due diligence required in making new mortgages with zero-downs, no docs, and lack of underwriting/title abnormalities...and let's not forget their collusion w/the RE sales brokers.

BOA should cease to exist, IMHO.

[w4rma]

9. Why was Bank of America bailed out? I don't see any good reason for it. (nt)

[sam sarrha]

10. B of A is just try'n to cover up that they no longer have the Deeds..they legally cant foreclose