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Bates White client Ambac obtains $1.84 billion settlement with Bank of America

Karl Snow was retained to provide expert testimony on behalf of Ambac Assurance Corporation (Ambac) in a series of three lawsuits filed against Bank of America and affiliated entities (including Countrywide, which Bank of America acquired in 2008), concerning residential mortgage-backed securities (RMBS). Ambac alleged that defendants originated and securitized hundreds of thousands of mortgage loans that materially breached representations and warranties associated with the quality of the loans. The at-issue loans were sold into 26 securitizations that closed between 2004 and 2007.

Ambac provided insurance to various certificates in the 26 securitizations containing the at-issue loans and incurred billions of dollars in claims payment obligations to the insured certificates. Dr. Snow, with the help of consulting experts Christopher Bennett and Kory Shipp, reconstructed the RMBS cashflow waterfalls for the 26 securitizations and forecasted future loan performance of the underlying loans in order to estimate damages to Ambac resulting from defendants’ securitization of, and failure to repurchase, alleged materially defective loans. Bates Whites’ work on the Ambac/Bank of America matters spanned nearly 10 years. Ambac and Bank of America settled these matters after 15 days of trial in Ambac’s first and largest case against Bank of America and Countrywide, with Bank of America agreeing to a collective settlement payment of $1.84 billion.

In a press release, Claude LeBlanc, Ambac’s President and Chief Executive Officer, stated, "Ambac is very pleased to have reached this settlement with Bank of America, which materially advances our strategic priority to progress AAC to a stable runoff and further maximizes optionality for our legacy financial guaranty business." To read Ambac’s announcement, click here.

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