Allstate adds two more lawsuits against Merrill Lynch unit now owned by Bank of America and Credit Suisse Group over mortgage-backed securities that they alleged to be safe. Allstate has already sued Citigroup, Deutsche Bank, Bank of America, and JP Morgan Chase.
Bank of America Corp.’s Merrill Lynch unit is being sued for fraudulently selling Allstate about $167 million of residential mortgage-backed securities. According to the lawsuit, Allstate is seeking damages including the lost market value of the securities, plus principal and interest payments.
In addition, Allstate is suing Credit Suisse Group AG units over claims they fraudulently sold Allstate more than $231 million of residential mortgage-backed securities. From Allstate lawsuit against Credit Suisse Group:
“The systemic (but hidden) abandonment of the disclosed underwriting guidelines led to soaring default rates in the mortgage loans underlying the certificates.” “The value of Allstate’s certificates has plummeted, causing Allstate to incur significant losses. These losses were not caused by the downturn in the U.S. housing market, but by the defendants’ faulty underwriting.”
Allstate alleges that the banks in the insurer's lawsuits against Bank of America, JP Morgan Chase, Deutsche Bank, Citigroup, and Credit Suisse Group, misrepresented underwriting standards, owner occupancy data and loan-to-value ratios.