The Federal Deposit Insurance Corp. filed three lawsuits against big banks, alleging the lenders misrepresented the quality of securitized loans sold to the now defunct Texas firm, Guaranty Bank.
The FDIC took Austin, Texas-based Guaranty Bank into receivership back in Aug. 2009.
This week, the regulator filed multiple lawsuits in Austin, Texas, suggesting Guaranty suffered major losses from toxic RMBS loans sold and packaged by mega banks and other financial institutions.
Defendants named in the multibillion-dollar lawsuits include Countrywide, JPMorgan Chase (JPM), Ally Financial, Deutsche Bank Securities (DB), Bank of America (BAC) and Goldman Sachs (GS) among others.
FDIC, on behalf of Guaranty, claims the banks misrepresented loan-to-value ratios, underwriting criteria and appraisal amounts when selling, packaging and underwriting home loans that became collateral for mortgage securities sold to Guaranty.
Specifically, the FDIC alleges the financial firms violated federal and Texas securities laws by failing to fully disclose or truthfully represent the quality of mortgages backing the security certificates.
In the first case, the FDIC accuses Countrywide Securities, Bank of America, Deutsche Bank and Goldman Sachs of playing a role in the packaging, selling or securitization of mortgages sold off to Guaranty Bank for $1.5 billion. The suit says Guaranty Bank acquired 8 certificates in the transaction.
The FDIC claims it studied a rough sampling of the securitized loans and alleges more than 60% of the loans packed into each deal contain material untrue or misleading statements.
The FDIC is suing for an undetermined amount that is no less than $559.7 million in damages.
The bank regulator also sued Ally Securities, Goldman Sachs, Deutsche Bank Securities and JPMorgan Securities among others. In that suit, the regulator claims, the firms were involved in the packaging, underwriting and sale of eight RMBS certificates valued at $1.8 billion.
The FDIC alleged in court records that the “defendants made untrue statements or omitted important information about such material facts as the loan-to-value ratios of the mortgage loans, the extent to which appraisals of the properties that secured the loans were performed in compliance with professional appraisal standards, the number of borrowers who did not live in the houses that secured their loans (that is, the number of properties that were not primary residences), and the extent to which the entities that made the loans disregarded their own standards in doing so.”
In that complaint, the FDIC is asking for at least $900.6 million in damages.
The regulator also sued JPMorgan Securities, Merrill Lynch, RBS Securities and WaMu Asset Acceptance Corp., making similar claims about 20 RMBS certificates that Guaranty paid $2.1 billion to acquire. The FDIC is requesting at least $677.4 billion in damages.
kpanchuk@housingwire.com
