NU Online News Service, May 3, 1:58 p.m. EST
Bond-insurer Ambac has pulled out of a suit against Bank of America Corp. involving an $8.5 billion mortgage-bond settlement.
In a letter dated April 30, the insurer, which was once the second-largest monoline insurer of bonds, gave no reason for the withdrawal.
The suit, filed in Supreme Court of the State of New Yorkbefore Judge Barbara Kapnick, is an Article 77 hearing aimed at resolving claims from investors in mortgage bonds issued by Countrywide Financial Corp., which was purchased in 2008 by Bank of America.
In an article first reported by Bloomberg, Ambac had no comment on the withdrawal.
The insurer has been in bankruptcy reorganization since 2010 after suffering losses on its book of structured-financial products, specifically residential-mortgage-backed securities, during the economic crisis of 2008.
The company's financial-guaranty insurer, Ambac Assurance established a segregated account for those liabilities in 2010 and has since been under rehabilitation, supervised by the Office of the Commissioner of Insurance for the State ofWisconsin.
A federal-bankruptcy judge granted a plan for reorganization to Ambac in March.
In early April, the New York-based insurer filed a suit against JP Morgan Chase Bank, alleging the bank's mortgage unit committed fraud by not following proper underwriting guidelines and by presenting poor-quality risks to the carrier.
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