Financial Guaranty Insurance Company received a $584 million cash payment from Bank of America to settle a lawsuit over nine mortgage-backed securities insured by FGIC.
The settlement resolves all litigation between FGIC and BofA, the bond insurer said in a press release Wednesday morning.
BofA took on the nine second-lien residential MBS products with its acquisition of Countrywide Home Loans in 2008.
Countrywide Home Loans and its affiliates were accused of attempting to uphold or increase their shares in the mortgage loan market by defrauding municipalities, investors, pensions and retirement funds across the country.
Financial guarantors have had varying amounts of success in reclaiming MBS-related losses from financial institutions, which they claim misrepresented the securities when they were issued.
In August, a lawsuit by Syncora Guarantee Inc. accusing JP Morgan Chase & Co. of similar behavior was reversed and dismissed by a New York appeals court. Neither Syncora nor FGIC are writing new business.
The initial complaint filed by FGIC against Countrywide included accusations of fraudulent inducement, breach of representations and warranties, borrower misrepresentations, false public statements and providing misleading data.
Wednesday's settlement puts an end to outstanding claims by FGIC related to the "alleged representations and warranties breaches" on the securitizations, the announcement said.
In a related agreement, the Bank of New York Mellon, acting as trustee on the mortgage securities, received a $307 million cash settlement from BofA for outstanding claims and allegations.
Seven of the nine trust settlements have already been resolved and within the next 45 days, the remaining two trust settlements are expected to be completed. BofA anticipates paying New York Mellon an additional $48 million.
