Ambac Backed $856M In Bad MBS Due To Merrill's Tricks: Suit

Law360, New York (April 16, 2012, 4:28 PM EDT) -- Bankrupt Ambac Financial Group Inc.'s bond insurance unit sued Bank of America Corp.'s Merrill Lynch & Co. Inc. affiliate Monday in New York state court, alleging they tricked Ambac into insuring an $856 million securitization packed with low-quality mortgages.

Ambac Assurance Corp. claims Merrill Lynch and its affiliates fraudulently misrepresented the quality of the loans pooled in the transaction, the underwriting guidelines that were followed and the due diligence that was performed on the loan pool to induce Ambac to insure the securitization. Those misrepresentations have...
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