BAC - Ambac Financial stock sinks 24% after court case may hurt RMBS recoveries

Ambac Financial Group (NYSE:AMBC) stock is plunging 24% after the company said a recent court decision that could affect its Ambac Assurance Corp.'s breach-of-contract cases related to its insured residential mortgage-backed securities (RMBS) transactions. That could reduce AAC's estimated subrogation recoveries recorded as of Dec. 31, 2021, the company said in a statement. "However, estimated subrogation recoveries do not represent AAC's view of the ultimate recovery from its RMBS litigations," it said. At Dec. 31, 2021, Ambac (AMBC) reported estimated subrogation recoveries related to AAC's cases at $1.730B, according to its Q4 filing. On March 17, 2022, the New York Court of Appeals issued a decision in the case of U.S. Bank National Association v. DLJ Mortgage Capital relating to Home Equity Asset Trust 2007-1 (HEAT), a RMBS trust. While AAC doesn't insure the HEAT securities and isn't a party to that litigation, "the HEAT decision may affect one of the

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Ambac Financial stock sinks 24% after court case may hurt RMBS recoveries