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Insurer MBIA sues Countrywide

October 02, 2008|From Times Wire Services

Bond insurer MBIA Insurance has sued Bank of America Corp.'s Countrywide Financial subsidiary, alleging that it committed fraud in obtaining guarantees on billions of dollars of trust obligations of mortgage-backed securities that have already cost the MBIA Inc. unit more than $459 million.

In a New York state court complaint, the Armonk, N.Y.-based insurer said Countrywide knowingly gave mortgages "to borrowers who could not afford to repay the loans, or who committed fraud in loan applications, or who otherwise did not satisfy the basic risk criteria for prudent and responsible lending."

The company asked for damages to be determined.

A Bank of America spokeswoman declined to comment.

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