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MBIA Says Credit Suisse Hid Crucial Documents in US Mortgage Case

reuters.com | June 23, 2014

By Jonathan Stempel

(Reuters) - Credit Suisse Group AG has withheld many key documents from MBIA Inc in a lawsuit accusing the Swiss bank of lying about how it processed loans used in mortgage-backed securities, and it should be ordered to review whether it has more evidence suggesting misconduct, the bond insurer said.

In a filing in New York state court on Monday, MBIA objected to what it called Credit Suisse's failure to turn over "some of the hottest documents" in the 4-1/2-year-old lawsuit, on the ground that they were "non-responsive."

MBIA, based in Armonk, New York, said it learned of the documents only in the last few months, after a court told Credit Suisse to turn over deposition transcripts from other U.S. cases involving similar claims.

Credit Suisse spokesman Drew Benson declined to comment.

The dispute stemmed from a December 2009 lawsuit in which MBIA accused Credit Suisse of fraudulently deceiving it into participating in a mortgage-backed securities transaction that quickly soured, causing the insurer to pay more than $296 million in claims.

Credit Suisse has said the lawsuit lacks merit.

Monday's filings included more than 500 pages of exhibits that MBIA said may support its claim that Credit Suisse hid defects in securitization practices before the financial crisis, reflecting the bank's desire to sell more securities rather than honor its stated policies. Many banks have faced similar claims.

Among the exhibits is an Aug. 21, 2007, email in which a Credit Suisse due diligence official referred to "some terrible decisions or missed calls, magnified by very bad feedback" in a bank business that handled underwriting and due diligence.

Another is an Nov. 22, 2006, email that MBIA said shows a bank official's concern about making "underwriting exceptions" that could result in "liability down the road when the loans go bad and people point out that we violated our own guidelines.

"The fulfillment process is a joke," the email said. "I hate to say it but I think we're either all in as a mortgage company or out completely at this point."

MBIA asked Justice Shirley Werner Kornreich in state court in Manhattan, who oversees the New York case, to order Credit Suisse to conduct a "targeted re-review" of documents to ensure it is turning over evidence properly.

The case is MBIA Insurance Corp. v. Credit Suisse Securities (USA) LLC et al, New York State Supreme Court, New York County, No. 603751/2009. (Reporting by Jonathan Stempel in New York; Editing by Leslie Adler)


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CFLA was founded by the Nation's Leading Foreclosure Defense Attorneys back in 2007 to serve the Foreclosure Defense Industry and fight pervasive Bank Fraud. Since opening our virtual doors, CFLA has rapidly expanded to become the premier online legal destination for small businesses and consumers. But as the company continues to grow, we're careful to hold true to our original vision. For us, putting the law within reach of millions of people is more than just a novel idea—it's the founding principle, just ask Andrew P. Lehman, J.D.. With convenient locations in Houston and Los Angeles, you can contact Our National Account Specialist and General Manager / Member Damion W. Emholtz at 888-758-2352 for a free Mortgage Fraud Analysis or to obtain samples of work product, including cutting edge Bloomberg Securitization Audits, Litigation Support, Quiet Title Packages, and for more information about our Nationally Accredited and U.S. Department of Education Approved "Mortgage Securitization Analyst Training Certification" Classes (3 days) 24 hours for approved CLE & MCLE Credit (Now Available Online).

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