MBIA sues GMAC unit
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- October
- 16
MBIA Insurance Corp. has filed a lawsuit alleging that it has suffered heavy losses because of reckless home mortgage lending practices by Residential Funding Co., a unit of GMAC.
Armonk-based MBIA seeks unspecified damages from Residential Funding in the lawsuit filed in U.S. District Court in Manhattan. MBIA, which issued guarantees on mortgage-backed securities, said it has been hurt by Residential Funding’s approval of mortgages to borrowers who couldn’t repay the loans.
“The risks inherent in the portfolios were significantly higher than what (Residential) represented to MBIA,†the lawsuit read.
Residential Funding could not be reached for comment.
It is the second time in the past two weeks that MBIA has filed suit against a mortgage lender. MBIA earlier sued Countrywide Financial Corp., alleging that lax lending standards and fraud by Countrywide contributed to thousands of home mortgages going into foreclosure during the housing bust.
This entry was posted
on Thursday, October 16th, 2008 at 4:21 pm by Jay Loomis.
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