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Allstate Complaint

Allstate Complaint

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Published by bryllaw
Allstate and others sue the banks over toxic MBS. Great summary of the ripoff tactics that resulted in the real estate bubble and the crash.
Allstate and others sue the banks over toxic MBS. Great summary of the ripoff tactics that resulted in the real estate bubble and the crash.

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Published by: bryllaw on Feb 23, 2011
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06/21/2014

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 SUPREME COURT OF THE STATE OF NEW YORKCOUNTY OF NEW YORKALLSTATE BANK, ALLSTATEINSURANCE COMPANY, ALLSTATELIFE INSURANCE COMPANY,ALLSTATE NEW JERSEY INSURANCECOMPANY, ALLSTATE LIFEINSURANCE COMPANY OF NEW YORK,AGENTS PENSION PLAN, and ALLSTATERETIREMENT PLAN,Plaintiffs,-against-JPMORGAN CHASE BANK, N.A.; J.P.MORGAN ACQUISITION CORPORATION;J.P. MORGAN SECURITIES INC.; J.P.MORGAN ACCEPTANCE CORPORATIONI; WM ASSET HOLDINGSCORPORATION; WAMU ASSETACCEPTANCE CORPORATION; WAMUCAPITAL CORPORATION;WASHINGTON MUTUAL MORTGAGESECURITIES CORPORATION; LONGBEACH SECURITIES CORPORATION;DAVID BECK; DIANE NOVAK; THOMASLEHMANN; EMC MORTGAGECORPORATION; STRUCTURED ASSETMORTGAGE INVESTMENTS II INC.;BEAR STEARNS ASSET BACKEDSECURITIES I LLC; and SACO I INC.Defendants.Index No.
COMPLAINT
FILED: NEW YORK COUNTY CLERK 02/16/2011
INDEX NO. 650398/2011NYSCEF DOC. NO. 2RECEIVED NYSCEF: 02/15/2011
 
 iNATURE OF ACTION ...................................................................................................................1
 
PARTIES .........................................................................................................................................7
 
JURISDICTION AND VENUE ....................................................................................................16
 
BACKGROUND ...........................................................................................................................17
 
A.
 
THE MECHANICS OF MORTGAGE SECURITIZATION ...........................................17
 
B.
 
SECURITIZATION OF MORTGAGE LOANS: THE TRADITIONAL MODEL ........19
 
C.
 
THE SYSTEMIC VIOLATION OF UNDERWRITING AND APPRAISALSTANDARDS IN THE MORTGAGE SECURITIZATION INDUSTRY .......................21
 
D.
 
DEFENDANTS WERE AN INTEGRATED VERTICAL OPERATIONCONTROLLING EVERY ASPECT OF THE SECURITIZATION PROCESS ..............24
 
(1)
 
JPMorgan Defendants ................................................................................24
 
(2)
 
WaMu Defendants .....................................................................................26
 
(3)
 
Bear Stearns Defendants ............................................................................27
 
E.
 
DEFENDANTS’ OFFERING MATERIALS ....................................................................29
 
(1)
 
The JPMorgan Offerings ............................................................................29
 
(2)
 
The WaMu Offerings .................................................................................30
 
(3)
 
The Long-Beach Offering ..........................................................................32
 
(4)
 
The Bear Stearns Offerings ........................................................................32
 
SUBSTANTIVE ALLEGATIONS ...............................................................................................34
 
I.
 
THE OFFERING MATERIALS CONTAINED UNTRUE STATEMENTS OFMATERIAL FACT AND OMISSIONS ABOUT THE MORTGAGEORIGINATORS’ UNDERWRITING STANDARDS AND PRACTICES, ANDMATERIAL CHARACTERISTICS OF THE MORTGAGE LOAN POOLS .................34
 
A.
 
Defendants’ Misrepresentations Regarding Underwriting Standards AndPractices .................................................................................................................34
 
(1)
 
JPMorgan Defendants’ Misrepresentations RegardingUnderwriting Standards And Practices ......................................................35
 
 
 ii(2)
 
WaMu Defendants’ Misrepresentations Regarding UnderwritingStandards and Practices..............................................................................35
 
(3)
 
Long Beach Defendants’ Misrepresentations RegardingUnderwriting Standards and Practices .......................................................36
 
(4)
 
Bear Stearns Defendants’ Misrepresentations RegardingUnderwriting Standards and Practices .......................................................39
 
B.
 
Defendants’ Misrepresentations Regarding Owner-Occupancy Statistics ............40
 
(1)
 
JPMorgan Defendants’ Misrepresentations Regarding Owner-Occupancy Statistics ..................................................................................40
 
(2)
 
WaMu Defendants’ Misrepresentations Regarding OwnerOccupancy Statistics ..................................................................................41
 
(3)
 
Bear Stearns Defendants’ Misrepresentations Regarding OwnerOccupancy Statistics ..................................................................................41
 
C.
 
Defendants’ Misrepresentations Regarding Loan-to-Value and CombinedLoan-to-Value Ratios .............................................................................................42
 
(1)
 
JPMorgan Defendants’ Misrepresentations Regarding LTV andCLTV Ratios ..............................................................................................42
 
(2)
 
WaMu Defendants’ Misrepresentations Regarding LTV and CLTVRatios .........................................................................................................42
 
(3)
 
Bear Stearns Defendants’ Misrepresentations Regarding LTV andCLTV Ratios ..............................................................................................43
 
D.
 
Defendants’ Misrepresentations Regarding Debt-to-Income Ratios .....................44
 
(1)
 
JPMorgan Defendants’ Misrepresentations Regarding Debt-to-Income Ratios ............................................................................................44
 
(2)
 
WaMu Defendants’ Misrepresentations Regarding Debt-to-IncomeRatios .........................................................................................................44
 
(3)
 
Bear Stearns Defendants’ Misrepresentations Regarding Debt-to-Income Ratios ............................................................................................45
 
E.
 
Defendants’ Misrepresentations Regarding Credit Ratings ...................................46
 
(1)
 
JPMorgan Defendants’ Misrepresentations Regarding CreditRatings .......................................................................................................46
 
(2)
 
WaMu Defendants’ Misrepresentations Regarding Credit Ratings ...........47
 

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