Manhattan Supreme Court Justice Eileen Bransten (See Profile) has set the stage for a complicated trial in MBIA’s lawsuit against Bank of America over mortgage-backed securities, denying motions for summary judgment from both sides on several key issues. In the lawsuit, MBIA Ins. v. Countrywide Home Loans, 602825/08, Bransten centers on 15 mortgage securitizations that were originated or purchased by Countrywide Home Loans and insured by MBIA. MBIA alleges that Countrywide, which was later acquired by BofA, misrepresented the riskiness of the securitizations.
MBIA scored an important victory earlier this month when the Appellate Division, First Department, ruled that, under the insurance agreements, BofA may be obligated to repurchase any loans if it misled MBIA about the riskiness of those loans, even if the loans are not in default. That ruling applied directly only to one of the securitizations at issue in the case, but Bransten ruled yesterday that the First Department’s logic applies to all of the securitizations. She also denied BofA’s motion for summary judgment that MBIA’s only remedy is through the repurchase agreement, leaving open the possibility that MBIA could recover under other claims, including fraudulent inducement and a claim for punitive damages.
