Following the decision by Judge Jed S. Rakoff of the United States District
Court for the Southern District of New York in Assured Guaranty's AGO case seeking
recoveries from Flagstar Bank FBC for breaches of representations and warranties
(R&W) in insured residential mortgage-backed securities (RMBS), Assured
Guaranty Ltd. President and CEO Dominic Frederico said:
“Judge Rakoff gave us an important victory, awarding us substantially all the
damages we had sought, including approximately $90 million as compensation for
claims paid, as well as interest, costs and attorneys' fees still to be
determined. This is the first trial related to RMBS R&W putbacks that has come
to a final court ruling, and it sets a strong precedent in support of the
rights of Assured Guaranty in these cases. The court recognized and clearly
articulated the responsibility of an R&W provider to honor its contractual
obligations to purchase defective mortgage loans.”
The decision is consistent with preliminary rulings from other courts in legal
actions that have called on RMBS R&W providers to take responsibility for
contractual commitments.
“His decision establishes clear liability as it relates to originators and
securitizers of RMBS transactions and strengthens Assured Guaranty's resolve
to seek full recovery from R&W providers that refuse to recognize this
liability,” added Mr. Frederico.
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