MBIA Insurance Corp. has filed a complaint against Credit Suisse Securities LLC and two other Credit Suisse Group AG subsidiaries, claiming the securities arm made ‘pervasive and material misrepresentations’ about mortgage-backed securities.
A Bloomberg report states that MBIA is suing after having paid more than $296 million in claims relating to defaulted residential mortgages. Credit Suisse Securities claimed it used stringent underwriting parameters to pick the loans sold into the MBS transactions, ‘when, in fact, it did not,’ MBIA says.
The loans went bad at an alarming clip, according to the insurer's complaint, with more than 51% of the original loan balance, or about $464 million, having defaulted and been charged off.
The complaint also names DLJ Mortgage Capital Inc. and Select Portfolio Servicing Inc. as defendants. A Credit Suisse spokesperson declined to comment for Bloomberg's article