Sources familiar with the matter and court documents were quoted by Reuters as saying that the Swiss lender and its affiliate DLJ Mortgage Capital were charged by the bond insurer over mortgage-backed securities.
The company was deceived about a pool of over 2,000 home equity lines of credit with a principal balance of approximately $170m.
In a case filed in 2010, Ambac accused both companies for failing to reveal that a lot of borrowers had little or no ability to repay.
The insurer said that it already had reimbursed claim payments of more than $44m, while tens of millions of claims is likely to be paid in the future.
Both the parties have filed stipulation discontinuing the action in New York state court, which indicates that the case has been settled, although both parties have not revealed the terms of the agreement, the news agency reported.
In a similar case, New York Attorney General Eric Schneiderman filed a case against Credit Suisse in November, for deceiving investors who lost billions in mortgage-backed securities marketed by the bank.
The bank inked a settlement agreement for $120m with the US Securities and Exchange Commission, for the sale of faulty mortgage bonds to investors.
