Assured Guaranty Offered Statement on US District Court Decision in Flagstar Case
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 (NYSE: AGO) case seeking recoveries from Flagstar Bank (NYSE: 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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