Another day, another Countrywide lawsuit…
Ambac Assurance Corp. has sued Bank of America (Countrywide) in New York state Supreme Court over $16.7 billion worth of shoddy mortgage-backed securities, according to a report from Businessweek.
The lawsuit claims former top mortgage lender Countrywide “fraudulently induced” Ambac to insure the bonds, despite their poor quality.
Many of the loans were apparently extended to borrowers despite their limited ability or complete inability to meet mortgage payment obligations.
Ambac has reportedly already paid out hundreds of millions of dollars in claims connected to the defaults which have fallen into the red at “extraordinary rates.”
Meanwhile, Countrywide has allegedly refused to repurchase the faulty loans or bring them into compliance.
The company believes it is entitled to damages because of Countrywide’s “massive fraud and pervasive and material breaches.”
Bank of America declined to comment.
Shares of Ambac have collapsed since the mortgage crisis got underway, falling from nearly $100 a share to just 55 cents today.