A U.S. judge sided with a bond insurer in a closely watched case over representation and warranty putbacks in residential mortgage backed securities.

U.S. District Judge Jed Rakoff ruled that Flagstar Bancorp violated agreements with Assured Guaranty Municipal to follow its own underwriting guidelines in making home equity lines of credit. He ordered Flagstar to reimburse $90 million that Assured paid out when home equity loans underlying two mortgage backed securities defaulted.

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