Bond insurer Syncora Guarantee has reached a settlement with Bank of America over mortgage-backed securities.
Bank of America has agreed to pay Syncora Guarantee $375 million to gain the settlement.
The suit by Syncora against Bank of America and its Countrywide subsidiaries was ended Tuesday in the Supreme Court of New York, New York County.
Syncora filed the suit against the Countrywide subsidiaries in January 2009.
“This is an action for fraud and breach of contract arising out of misrepresentations made by Countrywide in connection with two securitizations of home equity mortgage loans originated by Countrywide and insured by Syncora,” the original complaint stated.
To get Syncora to insure the securities, Countrywide claimed that it had been prudent in its underwriting of the loans, Syncora stated. In reality, Countrywide had made imprudent and reckless loans for the mortgages, Syncora wrote.
In an amended complaint filed in May 2010, Syncora said it had already paid more than $145 million in claims and “been noticed” of another $257 million of claims.
Syncora said it was entitled to be compensation for these losses.
Lawyers of Syncora and Bank of America did not return calls for this story. A Syncora representative did not respond to a call
“We’re pleased to resolve this matter,” said Bank of America spokesman Larry Grayson.
Syncora Guarantee is a subsidiary of Bermuda-based Syncora Holdings Ltd. Syncora Guarantee is currently not insuring new municipal bonds.
On Wednesday morning Syncora's stock rose 141% to $0.41 at 10:49 a.m. from Tuesday's close of $0.17.
