BofA’s Law Firm Says Lenders May Need More Loan Reserves
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Bank of America Corp.’s law firm defending the company against MBIA Inc. in a dispute over defective mortgages said that a court ruling in a separate case means lenders should reevaluate their reserves for bad loans.
Lenders could be forced to repurchase shoddy mortgages even if banks’ misrepresentations weren’t responsible for defaults, O’Melveny & Myers LLP said in a client note on its website. The law firm cited a June 19 ruling in which the judge sided with bond insurer Syncora Holdings Ltd. against a mortgage company.