Ambac Financial has sued Bank of America Corp (NYSE: BAC) over certain lending practices of Countrywide, a mortgage business which the bank purchased in 2007, accusing the lender of failing to follow its internal standards when making loan.
The New York-based insurer filed suit on Thursday in the state of New York accusing Bank of America Corp (NYSE: BAC) of not conforming to its own guidelines when underwriting loans “and in many cases [loans] were made to borrowers with little or no ability to repay their loans.”
Ambac said that it found 6,362 loans with a combined principal balance of $658 million that failed to meet the company’s guidelines. The insurer wrote various insurance policies for Countrywide which resulted in $1.95 billion worth of loan defaults, causing Ambac to pay more than $466 million in claim payments.
Bank of America Corporation is a bank holding company, and a financial holding company. The Company is a financial institution, serving individual consumers, small and middle market businesses, large corporations and governments with a range of banking, investing, asset management and other financial and risk management products and services. Through its banking subsidiaries (the Banks) and various nonbanking subsidiaries throughout the United States and in selected international markets, it provides a range of banking and nonbanking financial services and products through six business segments: Deposits, Global Card Services, Home Loans & Insurance, Global Commercial Banking, Global Banking & Markets, Global Wealth & Investment Management, with the remaining operations recorded in All Other.
Shares of Bank of America Corp (NYSE: BAC) traded down 0.06% during mid-day trading on Thursday.
