I don't understand the practical effect of this ruling. The judge did not say BoA/Countrywide was liable if it lied. The bond insurer is still required to prove damages.

ZAZ: I don't understand the practical effect of this ruling. The judge did not say BoA/Countrywide was liable if it lied.

Second paragraph:

New York State Supreme Court Justice Eileen Bransten ruled on Tuesday that to show fraud, MBIA need only show Countrywide misled it about the $20 billion of securities it insured, not that the misrepresentations caused its losses.

ZAZ: The bond insurer is still required to prove damages.

Sixth paragraph:

"No basis in law exists to mandate that MBIA establish a direct causal link between the misrepresentations allegedly made by Countrywide and claims made under the policy," she wrote, citing New York common law and insurance law.

Did we read the same article?

Flab

I read an article that said:

The judge also said Armonk, New York-based MBIA may try to prove financial damages, while agreeing with Countrywide that it "will not be an easy task."

ZAZ: The judge also said Armonk, New York-based MBIA may try to prove financial damages, while agreeing with Countrywide that it "will not be an easy task."

"may try" does not mean the same thing as "still required to".

While a good portion of Farkers will cheer to see BofA get rebuked, this ruling can come to bite a lot of people where the sun don't shine if insurers don't have to prove a direct link between the lie and the claim. It could allow them to deny any claim based on a simple typo or omission of a fact that has no bearing on the claim. "You lied about getting a DUI at 21, so we're not paying for the triple bypass surgery."

FT has a different article which I also read to say lies alone do not make Countrywide liable to refund losses:

Ms Bransten's ruling said MBIA must prove for its fraud claim that it issued the insurance policies based on the representations and "that it would not have done so or would have issued the policies on different terms had the alleged misrepresentations not been made".

The judge added: "MBIA must then prove that it was damaged as a direct result of the material misrepresentations. As has been aptly pointed out by Countrywide, this will not be an easy task."

http://www.ft.com/cms/s/0/bffea9a4-3657-11e1-9f98-00144feabdc0.html (Try entering "BofA suffers setback in Countrywide case" into Google news, because FT doesn't like direct links.)

ZAZ: FT has a different article which I also read to say lies alone do not make Countrywide liable to refund losses:

This one makes it a bit clearer. Thx.

Anyone has the link to the actual ruling?

Not sure which article is right, but imho, if this makes it easier for BOA to get shafted in the rear for their frauds and deceits, then I'm cool with it.

ZAZ: FT has a different article which I also read to say lies alone do not make Countrywide liable to refund losses:Ms Bransten's ruling said MBIA must prove for its fraud claim that it issued the insurance policies based on the representations and "that it would not have done so or would have issued the policies on different terms had the alleged misrepresentations not been made".

The judge added: "MBIA must then prove that it was damaged as a direct result of the material misrepresentations. As has been aptly pointed out by Countrywide, this will not be an easy task."
http://www.ft.com/cms/s/0/bffea9a4-3657-11e1-9f98-00144feabdc0.html (Try entering "BofA suffers setback in Countrywide case" into Google news, because FT doesn't like direct links.)

Basic law:
First you have to prove the opposing party is liable by tortious act or negligence, In this case the intentional tort of fraud

Then, once you've established the opposing party is liable for the tort, then you have to establish how and by how much, you were damaged as the only remedy available in non-equity civil cases is: Money

So what the judge is saying here, is that to reach the threshhold of finding BOA/Countrywide Liable, the insurer only has to prove that Countrywide lied to them when seeking insurance. She noted that it will be tough to prove damages in the damage phase however, but proving those damages was not necessary to establish the basic liability of BOA (and by the by, a finding of fraud entitles the damaged party to triple their actual damages)

Debeo Summa Credo: Magorn: ZAZ: FT has a different article which I also read to say lies alone do not make Countrywide liable to refund losses:Ms Bransten's ruling said MBIA must prove for its fraud claim that it issued the insurance policies based on the representations and "that it would not have done so or would have issued the policies on different terms had the alleged misrepresentations not been made".

The judge added: "MBIA must then prove that it was damaged as a direct result of the material misrepresentations. As has been aptly pointed out by Countrywide, this will not be an easy task."
http://www.ft.com/cms/s/0/bffea9a4-3657-11e1-9f98-00144feabdc0.html (Try entering "BofA suffers setback in Countrywide case" into Google news, because FT doesn't like direct links.)

Basic law:
First you have to prove the opposing party is liable by tortious act or negligence, In this case the intentional tort of fraud

Then, once you've established the opposing party is liable for the tort, then you have to establish how and by how much, you were damaged as the only remedy available in non-equity civil cases is: Money

So what the judge is saying here, is that to reach the threshhold of finding BOA/Countrywide Liable, the insurer only has to prove that Countrywide lied to them when seeking insurance. She noted that it will be tough to prove damages in the damage phase however, but proving those damages was not necessary to establish the basic liability of BOA (and by the by, a finding of fraud entitles the damaged party to triple their actual damages)

I'm no lawyer, as this comment will prove, but Is this a tort? I thought MBIA is suing for rescission of the insurance contracts they wrote. The reason this decision is beneficial for MBIA is that BoA can't point to the housing crash as the reason for the losses suffered by MBIA. So if the average FICO in the insured pools was 660 rather than 680, as represented by Countrywide, that in itself is reason to find in MBIA's favor even if they wou ...

I may be misreading it, but it seems that MBIA has actually sued for Fraud, which would be a tort rather than simply for recission of the insurance contact, which would, you are correct, be contract law matter. In fact it seems that countrywide is arguing that recission is MBIA's only remedy, and today's rulling allows MBIA instead to try to recover damages from Countrywide's sucessor in interest BOA. Now as the judge said, this is gonna be tough because they're going to have to prove Countrywide's lies caused them their losses, as opposed to a general collapse of the housing market.

As much as I'm no fan of BOA, they got the shaft with Countrywide. Why isn't the former CEO of Countrywide somebody's biatch in prison?

BoA thought it was getting a cheap deal, regulators desperately wanted somebody to take over Countrywide, and the deal was exempt from a rule barring mergers that would leave a single bank with over 10% of the market.

http://www.msnbc.msn.com/id/22606833/ns/business-real_estate/t/bank- am erica-acquire-countrywide/