MBIA Insurance Corporation is a leading provider of bond insurance including insurance for residential mortgage-backed securities. The defendant is Bank of America which operates the former Countrywide mortgage banking operations as Bank of America Home Loans, a division of Bank of America. The plaintiff alleges that Countrywide fraudulently misrepresented the riskiness of the loans that it was securitizing and misled MBIA Insurance Corporation into insuring the securitizations.
Econ One was retained by counsel for the plaintiff to conduct analyses and perform research while assisting Professor James Barth regarding the causes of the defaults on the securitizations and the losses eventually sustained by MBIA Insurance Corporation. Donald McCarthy supervised as well as participated in this work which involved the analysis of relationships between residential house prices, rising unemployment, and defaults on Countrywide’s securitized mortgages. In addition, Mr. McCarthy reviewed, and provided detailed critiques of, the sophisticated econometric models that the defendants’ experts used to support their opinions. To date in this ongoing case, Professor Barth has submitted an expert report.