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Published by: mattpauls on Sep 21, 2012
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EXHIBIT 1
FILED: NEW YORK COUNTY CLERK 09/20/2012
INDEX NO. 602825/2008NYSCEF DOC. NO. 1974RECEIVED NYSCEF: 09/20/2012
 
SUPREME COURT OF THE STATE OF
NEW
YORKCOUNTY OF NEW YORK CITY
MBIA Insurance
Corporation,
Plaintiff,Index No.
Ogi
Gt:i:2..
~
l.s-
COMPLAINT
-against-
Countrywide Home Loans, Inc., Countrywide
Securities
Corp.,
and
Countrywide Financial
Corp.Defendants.
-
NEWYO.'l'
COUNTY
ctEfh.,
ISfP
30
2U06
"'01
COiv:f-'ARED
WITH
COpy
FiLED
.
.
-
...
,,~.
• >
'"
""".
~
Plaintiff MBIA lm;urance Corporation ("MBIA"), by its attorneys, QuinnEmanuel Urquhart Oliver
&
Hedges
LLP,
faT
its Complaint herein against Countrywide HomeLoans, Inc. ("Countrywide Home"), Countrywide Securities Corporation ("CountrywideSecurities") and Countrywide Financial Corporation ("Countrywide Financial") (collectively,"Countrywide"), alleges as follows:
NATURE OF ACTION
1.
This
action
arises
Qut
of
the
fraudulent
acts
and
breaches
of
contract
of
Countrywide
in
connection
with
the
securitizations
of
pools
of
home
equity
loans
(the"Mortgage
Loans")_
Countrywide,
the
largest residential
mortgage
originator
and
servicer
in
the
country,
originated
and
sold (or otherwise conveyed) Mortgage Loans
to
trusts that in
tum
issued
and
sold
residential
mortgage~backed
securities
("RMBS")
to
investors.
To
make
these securitizations
more marketable, Countrywide induced
MBIA
to provide billions
of
dollars
of
credit
enhancements in
the
form
of
guarantees
of
the
trust
obligations
onparticular
classes
of
RMBS.
In order to do so, Countrywide falsely represented to both MBIA and the trust investors that
 
,
,.
Countrywide had originated the Mortgage
LOtH1S
in
strict compliance with its umkrwritill!!
standards, and
guidelines,
which were dcvciop
.
xi over lime
10
sen
.
CIl
the creditworthincss
or
borrowers and the likelihood that mortgage loans would h
...
·
rl']Xlid.
2.
In reality, as it fought aggressively
to
expand its already enormous market share
in the mortgage lending boom
of
the past few years, COlllltrywid
...
"-,-undcr tho
diro.)ctioll
or
!tlrll1l,,!f
Chief
Executive OHiccr Angelo Mozilo and former President and
Chief
Operating
omccr
David
SaI11bol~eveloped
a systematic pattern and practice
of
abandoning its own guidelines for loanorigination: knowingly lending
to
borrowers who could not afford to repay the loans,
Or
who
committed fraud in loan applications,
or
who otherwise did not satisfy the basic risk criteria forprudent and responsible lending that Countrywide claimed to usc.3. From
at
least 2005 through 2007, in securitization after securitiz.ation, thesepractices fundamentally changed the risk profile
of
the Mortgage Loans from
that
represented
by
Countrywide.
As
a direct result
of
Countrywide's
deliberate misconduct
as
a
loan
originator, andits fraudulent representations
as
to the
characteristks
of
he loan pools in
the
securitizations forwhich MBIA provided guar.mtees, thousands
of
Mortgage Loans are in default and/orforeclosure, while
MBIA
has already paid
out
over
$459 million
on
its guarantees and is exposed
to
claims in excess
of
several hundred m.illion dollars more.4. Further, compounding
the
harms
of
its original fraud,
Countrywide has
refused torepurchase
or
replace non-compliant. Mortgage Loans with eligible loans that
do meet
Countrywide)s
ovvn
guidelines
j
thereby breaching express representations and warranties
in
itscontracts with MBIA.
If
Countrywide had truthfully represented its deliberate deviation fromguidelines
and
past practice in loan origination,
MBIA
never would have issued guarantees
on
2