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Mortgage-Backed Securities Litigation

Federal Home Loan Bank Of Indianapolis v. Banc Of America Mortgage Securities, Inc. et al. 1:10-cv-01463 (S.D. Ind.) Indianapolis

Summary:

FHLB is suing to “recover losses on a $3 billion portfolio of mortgage-backed securities….[FHLB] wants the defendants to buy back money-losing packages of loans the banks sold as safe investments from 2005 to 2007.” Defendants include 37 banks and investment banks, (Goldman, Bank of America, Ally Financial, Bear Stearns, UBS, etc.) and JPMorgan Chase & Co., JPMorgan Securities Holding LLC, Chase Mortgage Finance Corp., JPM Securities Inc. Defendants allegedly “sold the Federal Home Loan Bank of Indianapolis 32 issues of mortgage-backed securities with a total face value of $2.96 billion. “Banks selling mortgage-backed securities were so eager to unload the mortgages and collect commissions that they “did not tell the truth” about what they were selling, causing FHLBI to suffer “substantial losses.” “The offering documents contained serious misstatements and omissions with respect to the mortgage pools, the creditworthiness of the borrowers, the quality of the collateral and the underwriting standards employed in originating the mortgage loans.” http://www.ibj.com/federal-home-loan-bank-of-indianapolis-sues-to-recover-losses-on-3b-mortgage-portfolio/PARAMS/article/23526

Status:

Action was originally filed in Indiana state court, it was removed by defendants to federal court in November 2010. As of 1 March 2011 motion to remand to state court is under review by the court.

News:

  1. http://www.ibj.com/federal-home-loan-bank-of-indianapolis-sues-to-recover-losses-on-3b-mortgage-portfolio/PARAMS/article/23526
  2. http://www.marketwatch.com/story/investors-sue-over-mortgage-backed-securities-2010-11-06