Boston, MA 05/07/2013 (wallstreetpr) – The share prices of MBIA Inc. (NYSE:MBI) (Closed: $14.29, Up by 45.37%) surged as high as 57 percent to reach $15.45 which was recorded to be the highest intraday jump of the stock. This peak in share price of the company was a result of the Dow Jones Newswire report on the deal between MBIA Inc. (NYSE:MBI) and Bank of America Corp. (NYSE:BAC) (closed at $12.88 up by 5.23%) This reported deal was an agreement between the two companies to end a litigation which was initiated by MBIA Inc. (NYSE:MBI) and was running for more than five years. MBIA Inc (NYSE:MBI) initiated the litigation against the Countrywide unit of Bank of America Corp. (NYSE:BAC) for reasons of fraud and breach of contract with respect to securitized home loans.
Case Against Bank Of America Corp. (NYSE:BAC)
Bank of America Corp. (NYSE:BAC) was sued for its mortgage loans which were defectively issued. These mortgage loans were further securitized and issued to investors for trading. MBIA Inc. (NYSE:MBI) was involved in guaranteeing payments to the investors who purchased these securities. As the loans were found defective, the securities did not payoff thereby resulting in loss to MBIA Inc. (NYSE:MBI). This led the company to sue against Charlotte, North Carolina based Bank of America Corp (NYSE:BAC) to compensate for its loss. As a result of this litigation, Armonk, New York based MBIA Inc. (NYSE:MBI) is now set to get $1.6 billion as compensation and Bank of America Corp will receive 5 percent stake in MBIA Inc. (NYSE:MBI) in the form of warrants.