Written by Biloxi
More trouble for the banks. So far, Allstate sued Bank of America and JP Morgan Chase of being misled over millions of dollars of bad mortgage backed securities that the insurer were sold and lost money over. Add Citgroup and Deutsche Bank to the list to being sued that was filed in the New York state Supreme Court in Manhattan:
The insurer said it bought more than $200 million of the securities, backed by residential mortgages, from the Citigroup defendants and about $185 million from the Deutsche Bank units after relying on misrepresentations and omissions regarding underwriting standards, owner occupancy data and loan-to-value ratios.
“Allstate was made to believe it was buying highly rated, safe securities,” the Northbrook, Illinois-based company said in its complaint against New York-based Citigroup. “Defendants knew the pools were toxic mixes of loans extended to borrowers who could not afford the properties and thus were highly likely to default.”
It sounds like more shoes to drop in lawsuits in toxic loans. Who else is next on Allstate's list? And are other insurance companies going to follow Allstate's footsteps?
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