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A.I.G.'s Lawsuit Against Bank of America

A.I.G.'s Lawsuit Against Bank of America

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Published by DealBook
The American International Group's lawsuit against Bank of America, accusing the banking giant and firms it had acquired of having misled investors on securities tied to subprime mortgages.
The American International Group's lawsuit against Bank of America, accusing the banking giant and firms it had acquired of having misled investors on securities tied to subprime mortgages.

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Published by: DealBook on Aug 08, 2011
Copyright:Attribution Non-commercial

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07/24/2013

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SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK 
AMERICAN INTERNATIONAL GROUP,INC.,AIG SECURITIES LENDINGCORPORATION,
 
AMERICANGENERAL ASSURANCE COMPANY,AMERICAN GENERAL LIFE ANDACCIDENT INSURANCE COMPANY,AMERICAN GENERAL LIFEINSURANCE COMPANY, AMERICANGENERAL LIFE INSURANCECOMPANY OF DELAWARE,AMERICAN HOME ASSURANCECOMPANY, AMERICANINTERNATIONAL GROUPRETIREMENT PLAN, CHARTISPROPERTY CASUALTY COMPANY,CHARTIS SELECT INSURANCECOMPANY, CHARTIS SPECIALTYINSURANCE COMPANY, COMMERCEAND INDUSTRY INSURANCECOMPANY, FIRST SUNAMERICA LIFEINSURANCE COMPANY, LEXINGTONINSURANCE COMPANY, NATIONALUNION FIRE INSURANCE COMPANYOF PITTSBURGH, PA, NEWHAMPSHIRE INSURANCE COMPANY,SUNAMERICA ANNUITY AND LIFEASSURANCE COMPANY,SUNAMERICA LIFE INSURANCECOMPANY,THE INSURANCECOMPANY OF THE STATE OFPENNSYLVANIA, THE UNITED STATESLIFE INSURANCE COMPANY IN THECITY OF NEW YORK, THE VARIABLEANNUITY LIFE INSURANCECOMPANY, and WESTERN NATIONALLIFE INSURANCE COMPANY,
Plaintiffs,
against-
 BANK OF AMERICA CORPORATION,
Index No. ___________ COMPLAINT
 
BANC OF AMERICA SECURITIES LLC,BANK OF AMERICA, NATIONALASSOCIATION, BANC OF AMERICAFUNDING CORPORATION, BANC OFAMERICA MORTGAGE SECURITIES,INC., ASSET BACKED FUNDINGCORPORATION, NB HOLDINGSCORPORATION, MERRILL LYNCH &CO., INC., MERRILL LYNCHMORTGAGE LENDING, INC., FIRSTFRANKLIN FINANCIALCORPORATION, MERRILL LYNCHMORTGAGE CAPITAL INC., MERRILLLYNCH CREDIT CORPORATION,MERRILL LYNCH, PIERCE, FENNER &SMITH INC., MERRILL LYNCHMORTGAGE INVESTORS, INC.,COUNTRYWIDE FINANCIALCORPORATION, COUNTRYWIDECAPITAL MARKETS LLC,COUNTRYWIDE HOME LOANS, INC.,COUNTRYWIDE SECURITIESCORPORATION, CWABS, INC.,CWALT, INC., CWHEQ, INC., andCWMBS, INC., Defendants.
 
 
i
TABLE OF CONTENTSPage
 NATURE OF ACTION ...................................................................................................................2
PARTIES .......................................................................................................................................14
JURISDICTION AND VENUE ....................................................................................................26
BACKGROUND ...........................................................................................................................26
I.
THE MECHANICS OF MORTGAGE SECURITIZATION ...........................................26
II.
THE RAPID EXPANSION OF MORTGAGE SECURITIZATIONTRANSFORMS THE INDUSTRY ...................................................................................29
III.
DEFENDANTS OPERATED ON EVERY LEVEL OF THE SECURITIZATIONPROCESS ..........................................................................................................................31
ALLEGATIONS ............................................................................................................................34
IV.
DEFENDANTS’ MATERIAL MISREPRESENTATIONS .............................................34
A.
Defendants’ Offering Materials .............................................................................34
B.
Defendants’ Misrepresentations Regarding Loan Underwriting Standardsand Practices ..........................................................................................................37
C.
Defendants’ Misrepresentations Regarding Loan-to-Value and CombinedLoan-to-Value Ratios .............................................................................................40
D.
Defendants’ Misrepresentations Regarding Owner-Occupancy ............................43
E.
Defendants’ Misrepresentations Regarding Credit Ratings ...................................44
V.
DEFENDANTS’ REPRESENTATIONS TO AIG WERE FALSE ..................................45
A.
Loan-to-Value Ratios Represented by Defendants Were False .............................47
B.
Combined Loan-to-Value Ratios Represented by Defendants Were False ...........53
C.
Owner-Occupancy Levels Represented by Defendants Were False ......................55
D.
Defendants Engineered Inflated Credit Ratings ....................................................58
(1)
All Deals Have Suffered Significant Credit Rating Downgrades ..............63

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