Ambac Assurance Corp. (AMBC) sued Bank of America (BAC) in order to recoup hundreds of millions of dollars that it lost during the financial crisis from insuring roughly $1.68 billion of securities backed at least in part by risky mortgages from countrywide, Reuters said.
In a complaint filed on Tuesday in a New York state court in Manhattan, Ambac accused Countrywide of lying about how well it underwrote so-called "pay option adjustable-rate mortgage negative amortization" loans that backed the securities.
The securities were issued in eight transactions between 2005 and 2007, Ambac said.
Bank of America announced in August a $16.65 billion settlement agreement with the U.S. Department of Justice, certain federal agencies and six states to resolve claims over toxic residential mortgage-backed securities, collateralized debt obligations and an origination release on residential mortgage loans sold to Fannie Mae and Freddie Mac.
At the time, Chief Executive Officer Brian Moynihan said, “We believe this settlement, which resolves significant remaining mortgage-related exposures, is in the best interests of our shareholders, and allows us to continue to focus on the future.”