Bank of America Loses Key Battle In Mortgage Fraud Fight
“A New York court ruled yesterday that a bond insurer claiming Bank of America’s Countrywide unit fraudulently induced it to insure $21 billion of mortgage-backed securities can use statistical sampling to prove its case.
The ruling does not mean that MBIA will automatically prevail if the sampling shows that the loan pools were flawed. Bank of America may still argue that the sampling methodology was too flawed to amount to proof of MBIA’s claims. Alternatively, it could present statistical sampling of its own to counter the findings of MBIA’s sampling. But whether these arguments will prevail will be made by the finder of fact at trial—which means either the jury or—if Bank of America opts not to have a jury trial—the judge.
MBIA has been handed a powerful tool for establishing its claims. And Bank of America is a bit closer to facing the put-back apocalypse it hoped it could avoid—or at least slow down—by fighting the claims one loan at a time.”