Home      Login

Abstract: 

Litigation stemming from the residential mortgage-backed securities (RMBS) meltdown is finally starting to produce legal holdings that will likely shape RMBS litigation going forward. The course of this litigation, however, has been molded by unlikely plaintiffs: the bond insurers who insured the issued securities. These insurers have brought claims against the banks that packaged and sold RMBS to investors. Compared to investors, whose claims have been widely reported, bond insurers face potentially more hurdles in convincing the courts that that they are indeed victims, especially because they are often considered to be highly sophisticated commercial parties that had a front-and-center role in the financial crisis. Even so, the bond insurers have achieved significant legal victories, and investor plaintiffs will undoubtedly utilize some of the insurers’ winning strategies going forward.

Keywords: mortgage backed securities; MBS; securitization; bond insurer; representations and warranties; fraudulent inducement; due diligence; financial crisis; statistical sampling

Affiliations:  1: Nixon Peabody; 2: Nixon Peabody; 3: Nixon Peabody.