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US GOVT SUES BOTH CITIGROUP AND HSBC-BOTH LAWSUITS BY FHFA-READ HERE-SEPT 2 2011

US GOVT SUES BOTH CITIGROUP AND HSBC-BOTH LAWSUITS BY FHFA-READ HERE-SEPT 2 2011

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Published by 83jjmack
READ BOTH LAWSUITS HERE
READ BOTH LAWSUITS HERE

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Published by: 83jjmack on Sep 03, 2011
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10/24/2011

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 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-CITIGROUP, INC.; CITIGROUPMORTGAGE LOAN TRUST, INC.;CITIGROUP GLOBAL MARKETS, INC.;CITIGROUP GLOBAL MARKETS REALTYCORP.; SUSAN MILLS; RANDALLCOSTA; SCOTT FREIDENRICH; RICHARDA. ISENBERG; MARK I. TSESARSKY;PETER PATRICOLA; JEFFREYPERLOWITZ; and EVELYN ECHEVARRIA,Defendants.
___ CIV. ___ (___)COMPLAINTJURY TRIAL DEMANDED
 
 i
TABLE OF CONTENTSPage
NATURE OF ACTION ...................................................................................................................1
 
PARTIES .........................................................................................................................................6
 
JURISDICTION AND VENUE ......................................................................................................9
 
FACTUAL ALLEGATIONS ........................................................................................................10
 
I.
 
THE SECURITIZATIONS ................................................................................................10
 
A.
 
Residential Mortgage-Backed Securitizations In General .....................................10
 
B.
 
The Securitizations At Issue In This Case .............................................................12
 
C.
 
The Securitization Process .....................................................................................12
 
1.
 
CGMR Pools Mortgage Loans In Special Purpose Trusts.........................12
 
2.
 
The Trusts Issue Securities Backed By The Loans ....................................13
 
II.
 
THE DEFENDANTS’ PARTICIPATION IN THE SECURITIZATIONPROCESS ..........................................................................................................................16
 
A.
 
The Role Of Each Of The Defendants ...................................................................16
 
1.
 
CGMR ........................................................................................................17
 
2.
 
CGMLT......................................................................................................18
 
3.
 
CGMI .........................................................................................................18
 
4.
 
Citi..............................................................................................................19
 
5.
 
The Individual Defendants .........................................................................20
 
B.
 
Defendants’ Failure To Conduct Proper Due Diligence ........................................25
 
III.
 
THE REGISTRATION STATEMENTS AND PROSPECTUS SUPPLEMENTS ..........30
 
 
 iiA.
 
Compliance With Underwriting Guidelines ..........................................................30
 
B.
 
Statements Regarding Occupancy Status Of Borrower .........................................33
 
C.
 
Statements Regarding Loan-To-Value Ratios .......................................................35
 
D.
 
Statements Regarding Credit Ratings ....................................................................37
 
IV.
 
FALSITY OF STATEMENTS IN THE REGISTRATION STATEMENTS ANDPROSPECTUS SUPPLEMENTS ......................................................................................39
 
A.
 
The Statistical Data Provided In The Prospectus Supplements ConcerningOwner Occupancy And LTV Ratios Was Materially False ...................................39
 
1.
 
Owner Occupancy Data Was Materially False ..........................................40
 
2.
 
Loan-To-Value Data Was Materially False ...............................................42
 
B.
 
The Originators Of The Underlying Mortgage Loans SystematicallyDisregarded Their Underwriting Guidelines .........................................................45
 
1.
 
Government Investigations Have Confirmed That The OriginatorsOf The Loans In The Securitizations Systematically Failed ToAdhere To Their Underwriting Guidelines ................................................45
 
i.
 
Wells Fargo ....................................................................................46
 
ii.
 
Countrywide ...................................................................................49
 
iii.
 
American Home .............................................................................50
 
iv.
 
Argent ............................................................................................52
 
v.
 
WMC..............................................................................................54
 
vi.
 
Inflated Appraisals .........................................................................55
 
2.
 
The Collapse Of The Certificates’ Credit Ratings Further IndicatesThat The Mortgage Loans Were Not Originated In Adherence ToThe Stated Underwriting Guidelines .........................................................56
 

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