On February 24, monoline insurer Syncora Guarantee, Inc. announced that it had reached a settlement of RMBS litigation against JP Morgan Chase for an undisclosed sum. Syncora had alleged that J.P. Morgan and its affiliates misrepresented the quality of loans underlying RMBS securitizations insured by Syncora. Press Release.
Syncora
NY Appellate Court Holds CIFG and Syncora Lack Standing in $1.8 Billion MBS Suit
On April 25, the First Department of the Appellate Division of the New York Supreme Court affirmed an order barring monoline insurers CIFG and Syncora from suing GreenPoint Mortgage Funding for alleged violations of representations and warranties concerning loans backing $1.8 billion in RMBS securitizations. The order upheld the lower court’s denial of the insurers’ motion to file a third amended complaint, and held that the insurers could not directly assert claims against GreenPoint because they were neither parties to the relevant agreements nor intended third party beneficiaries. Decision.
Bank of America’s Motion to Consolidate Actions by Bond Insurers Denied
On October 31, 2011, Justice Bransten of the Supreme Court for the State of New York denied Bank of America’s (“BofA”) motion to split the successor liability claims from four separate lawsuits pending against the bank and consolidate those claims into a single case. Four monoline insurers that insured Countrywide mortgage-backed securities – MBIA Inc., Syncora Guarantee Inc., Ambac Assurance Corp., and Financial Guaranty Insurance Co. – have sued BofA and Countrywide for fraud and breach of contract. BofA argued that the nearly identical successor liability claims in the four suits should be severed from the individual cases, consolidated, and stayed until after primary liability is decided. Justice Bransten agreed the claims were similar but found severance and consolidation would prejudice MBIA, the first to file suit, by unduly delaying its claims while the other insurers conduct discovery. Decision.