Earlier this year, the Federal Home Loan Bank of Seattle filed lawsuits against 11 global financial institutions that sold it almost $4 billion in mortgage-backed securities during the height of the housing market bubble, saying those institutions made false or misleading statements about the quality of the securities.
The Home Loan Bank, part of a network of cooperative institutions that supply money for member banks, wants to recoup at least part of the purchase price, plus interest, of 43 securities it bought between 2006 and 2007, according to the complaints filed in King County Superior Court in Seattle.
The 11 lawsuits, filed late last month, all contain similar allegations and demand jury trials. The Home Loan Bank essentially wants to “rescind” the transactions: It will return the securities for its money back, the complaints say.
The Home Loan Bank is suing Goldman Sachs & Co., Morgan Stanley, Barclays Capital, RBS Securities, UBS Securities, Deutsche Bank Securities, Credit Suisse, Bank of America, Merrill Lynch, Countrywide Financial (both Merrill and Countrywide are now owned by Bank of America), and Bear Stearns, now owned by JPMorgan Chase. All of the banks played a role in packaging up the mortgages into securities and selling them to the Home Loan Bank.
Investor lawsuits against companies that securitized mortgages have been filed by the dozens nationwide as those securities have lost value over the past two years, according to banking and legal experts.
Do you want to learn more about these lawsuits, or do you have questions about mortgage-backed securities in your portfolio?