Investments

Judge dismisses Prudential mortgage fraud lawsuit against BofA

Rules that Prudential did not prove BofA lied to ratings agencies

A federal judge threw out a lawsuit brought by Prudential Financial (PRU), which claimed that Bank of America (BAC) falsely represented the quality of $1.9 billion of pre-crisis residential mortgage-backed securities, leaving Prudential on the hook for “countless” home loans that defaulted.

According to report from Reuters, U.S. District Judge Stanley Chesler ruled that Prudential did not prove that Bank of America lied to ratings agencies about the quality of the loans in question.

From the Reuters report:

He also said Prudential could not rely on "after-the-fact" computer analysis to show the defendants knew when arranging the 54 securitizations at issue from 2004 to 2007 that property appraisals were being systematically inflated.

Chesler, who previously dismissed Prudential's racketeering claim, threw out most of the Newark-based insurer's remaining claims with prejudice.

He said Prudential may resubmit one claim involving 21 securitizations where the defendants acted as underwriters, not sponsors or issuers. The judge did not rule on Prudential's "equitable fraud" claim.

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