UBS sued Bank of America for $200 million.
The Swiss-based lender’s lawsuit alleges that the United States’ second-largest financial institution refused to cover legal costs related to risky mortgages issued before the 2008 global crisis.
UBS has bundled Countrywide Financial mortgages, which Bank of America bought in 2008, into securities. The Swiss financial institution also stated that Countrywide has agreed to indemnify the damage from the claims. In this case, claims are implied that the mortgages were underwritten poorly or fraudulently.
In 2013, UBS reached an $885 million settlement with the US Federal Housing Finance Agency and a confidential settlement in 2016 with the Federal Home Loan Bank of San Francisco over Countrywide’s loans.
The Swiss lender claims that lengthy negotiations were held with Bank of America for indemnification. In this case, among other things, legal costs for about $53 million were discussed. However, as stated by UBS, the second-largest financial institution in the United States refused to comply with its indemnification obligations.
Bank of America did not respond to a media request about the lawsuit from the Swiss lender. UBS also did not provide journalists with any data on the relevant issue.
The complaint was filed in New York State Court in Manhattan.
It is worth noting that since 2008, many court proceedings have been conducted aimed at holding banks liable for the plunging value of residential mortgage-backed securities. In the past, the relevant securities were classified as safe.
As we have reported earlier, UBS Returns to Profit.
