When it comes to repurchase agreements, insurers have had greater success in getting HELOC mortgages from RMBS deals repurchased, JPMorgan Securities analysts said. The success rate is as high as a 60%.
However, analysts said that for other deal structures, the issue of mortgage insurance really did not make much of a difference since representation and warranty was structured into the fraud provisions of each deal prospectus.
Separately, in a letter addressed to Bank of America, the Association of Financial Guaranty Insurers (AFGI) said that BofA's defensive posture would prove ineffective in shielding it from its legal obligations.
"Each of our industry members that has insured a BofA securitization has at this juncture concluded that more than half of 2005, 2006 and 2007 vintage nonperforming HELOCs and first and second lien residential mortgages reviewed or sampled, qualify for repurchase by BofA in the securitization insured by then," the AGFI said.
According to AFGI, BofA repurchase obligation for paper insured by members fall in the area of $10 billion to $20 billion.