RMBS

AIG Expected to Sue BofA, Others, Over Mortgage Bonds

Published August 8, 2011 12:28 PM EDT 1 Min Read

American International Group (AIG) plans to sue Bank of America along with a host of other prominent financial institutions as the insurer seeks to recover losses on MBS, according to a report in The New York Times.The newspaper, quoting sources with knowledge of the pending action, says AIG hopes to recover more than $10 billion in losses on some $28 billion in investments, claiming the bank along with its Merrill Lynch and Countrywide Financial units misrepresented the quality of mortgages.

AIG is preparing similar claims against Goldman Sachs, JPMorgan Chase, and Deutsche Bank. The lawsuit is expected to be filed early this week in New York State Supreme Court.

BofA spokesman Lawrence Di Rita said the bank’s disclosures on the quality of the MBS were adequate for sophisticated investors. Many of the loans lost value because of the housing crisis, he said.

Insurance conglomerate AIG owns a mortgage insurance affiliate, as well as a nonprime lender/servicer.

For reprint and licensing requests for this article, click here.

RMBS

More From Asset Securitization Report

Fraud

SEC sues three ex-Tricolor executives over bond fraud

The agency says the subprime auto lender pledged the same car loans to several lenders and bond deals at once, leaving investors owed about $945 million.

By Carter Pape

Technology Reporter

American Banker

August 20

Flood insurance

Podcast Why won’t Congress fix flood insurance?

For decades lawmakers have ignored broad structural flaws in the National Flood Insurance Program, which underpins millions of home mortgages. And the problem is only getting worse.

By Jon Prior

Staff Writer

American Banker

September 24

Arbitration

U.S. Chamber, banking groups sue over CFPB arbitration rule

The groups argue that the CFPB did not properly conduct a cost-benefit analysis of the rule banning mandatory arbitration agreements and that the final product will harm, not help, consumers.

By Ian McKendry

Reporter

September 29

Chris Stinebert, president and CEO of AFSA

RMBS

Morgan Stanley Reaches $3.2B Settlement Over Mortgage Bonds

Morgan Stanley agreed to pay $3.2 billion to end a joint federal-state investigation into its handling of mortgage-backed securities, the fourth deal to be struck in a probe of the big U.S. banks' role in the subprime mortgage meltdown and the financial crisis it spawned.

February 11

RMBS

AIG to Spin Off Mortgage Insurer

American International Group announced $3.6 billion in new costs to fill a reserve shortfall and said it will hold an initial public offering for its mortgage insurer and sell an adviser network.

January 26