by Calculated Risk on 5/12/2008 04:05:00 PM

Just like AMBAC, MBIA has forensic experts reviewing individual loans, and they believe they have a "case for material financial compensation". From the conference call:

"The loss of numbers assume zero recovery from any type of remediation. I do not believe that will be the result. For those of you aware of our remediation history, we intend to remediate the deals as vigorously [as we have in the past] -- we have had teams of forensic experts reviewing loans examining whether they should have qualified to have been included in the insured exposure in the first place. We have a case for material financial compensation based upon the diligence we have performed so far."

Other comments (from reader Brian):

"They spent a lot of time on their home equity line of credit (HELOC) and closed-end second-lien (CES) residential mortgage-backed securities (RMBS) portfolio. Of $18.8B portfolio (77% of which was originated in 06/07), 57% or $11.B have loss reserves associated with it. These RMBS deals have cumulative loss expectations generally in the range of 15-35% with a few outliers of 40-60%. They have taken $1.1 B in reserves to date. The originators for their book were Countrywide 55%, Rescap 28% and IndyMac 6% - pretty much a murderer's row of mortgage underwriters!

They also disclosed in the Q&A that they have $50MM of exposure to Vallejo, CA just to put the icing on the cake."