UNITED STATES DISTRICT COURTSOUTHERN DISTRICT OF NEW YORKFEDERAL HOUSING FINANCE AGENCY,AS CONSERVATOR FOR THE FEDERALNATIONAL MORTGAGE ASSOCIATIONAND THE FEDERAL HOME LOANMORTGAGE CORPORATION,Plaintiff,-against-CREDIT SUISSE HOLDINGS (USA), INC.,CREDIT SUISSE (USA), INC., CREDITSUISSE SECURITIES (USA) LLC, DLJMORTGAGE CAPITAL, INC., CREDITSUISSE FIRST BOSTON MORTGAGESECURITIES CORPORATION, ASSETBACKED SECURITIES CORPORATION,CREDIT SUISSE FIRST BOSTONMORTGAGE ACCEPTANCECORPORATION, ANDREW A. KIMURA,JEFFREY A. ALTABEF, EVELYNECHEVARRIA, MICHAEL A. MARRIOTT,ZEV KINDLER, JOHN P. GRAHAM,THOMAS E. SIEGLER, THOMASZINGALLI, CARLOS ONIS, STEVEN L.KANTOR, JOSEPH M. DONOVAN,JULIANA JOHNSON, and GREG RICHTER,Defendants.
___ CIV. ___ (___)COMPLAINTJURY TRIAL DEMANDED
i
TABLE OF CONTENTSPage
NATURE OF ACTION ...................................................................................................................1
PARTIES .........................................................................................................................................9
The Plaintiff and the GSEs
...................................................................................................9
The Defendants
....................................................................................................................9
The Non-Party Originators
................................................................................................13
JURISDICTION AND VENUE ....................................................................................................13
FACTUAL ALLEGATIONS ........................................................................................................14
I.
THE SECURITIZATIONS ................................................................................................14
A.
Residential Mortgage-Backed Securitizations In General .....................................14
B.
The Securitizations At Issue In This Case .............................................................16
C.
The Securitization Process .....................................................................................20
1.
DLJ Mortgage Capital Groups Mortgage Loans in Special PurposeTrusts..........................................................................................................20
2.
The Trusts Issue Securities Backed by the Loans ......................................21
II.
THE DEFENDANTS’ PARTICIPATION IN THE SECURITIZATIONPROCESS ..........................................................................................................................26
A.
The Role of Each of the Defendants ......................................................................26
1.
DLJ Mortgage Capital................................................................................26
2.
CSFB Mortgage Securities, Asset Backed Securities, and CSFBMortgage Acceptance ................................................................................28
3.
CS Securities ..............................................................................................28
4.
CS USA ......................................................................................................29
5.
CS Holdings ...............................................................................................29
6.
The Individual Defendants .........................................................................30
iiB.
The Defendants’ Failure To Conduct Proper Due Diligence .................................32
III.
THE REGISTRATION STATEMENTS AND THE PROSPECTUSSUPPLEMENTS................................................................................................................34
A.
Compliance With Underwriting Guidelines ..........................................................34
B.
Statements Regarding Occupancy Status of Borrower ..........................................37
C.
Statements Regarding Loan-to-Value Ratios .........................................................40
D.
Statements Regarding Credit Ratings ....................................................................43
IV.
FALSITY OF STATEMENTS IN THE REGISTRATION STATEMENTS ANDPROSPECTUS SUPPLEMENTS ......................................................................................45
A.
The Statistical Data Provided in the Prospectus Supplements ConcerningOwner Occupancy and LTV Ratios Was Materially False ....................................45
1.
Owner Occupancy Data Was Materially False ..........................................46
2.
Loan-to-Value Data Was Materially False ................................................48
B.
The Originators of the Underlying Mortgage Loans SystematicallyDisregarded Their Underwriting Guidelines .........................................................52
1.
A Forensic Review of Loan Files Has Revealed Pervasive Failureto Adhere to Underwriting Guidelines .......................................................53
(a)
Stated Income Was Not Reasonable ..............................................55
(b)
Evidence of Occupancy Misrepresentations ..................................57
(c)
Debts Incorrectly Calculated..........................................................58
(d)
Credit Inquiries That Indicated Misrepresentation of Debt ...........59
2.
Government Investigations and Other Evidence Have ConfirmedThat the Originators of the Loans in the SecuritizationsSystematically Failed to Adhere to Their Underwriting Guidelines .........61
3.
Credit Suisse Routinely Included in Securitizations MortgageLoans That Failed to Meet Underwriting Standards ..................................70
4.
Credit Suisse’s Own Insurers Have Found That Loan GroupsSecuritized by Credit Suisse Are Full of Loans Originated inViolation of Underwriting Guidelines .......................................................72
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C. The Securitization Process for FHFA v Credit Suisse Holdings (USA) Inc, NYSD, 09-02-2011, COMPLAINT
FHFA lawsuit for securities fraud.
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