Assured Guaranty

Assured Sues OneWest Bank in Connection with RMBS Insurance

On August 9, Assured Guaranty filed suit in California state court against OneWest Bank FSB, claiming that the company’s loan servicing was to blame for $335 million it has paid in insurance claims related to residential mortgage-backed securities.  Assured alleges that when OneWest acquired IndyMac Bank FSB’s role as servicer in 2009 of the mortgage loans, the loans began to experience significant delinquencies and defaults.  Assured alleges that PricewaterhouseCoopers conducted an independent audit and found that OneWest was materially noncompliant with several loan servicing requirements.  Assured also alleges that the Office of Thrift Supervisions has brought an enforcement action against OneWest for unsafe and unsound practices regarding its handling of servicing and foreclosure proceedings.  Assured asserts claims for breach of contract and for specific performance and declaratory relief seeking to terminate OneWest as servicer.  Complaint.

Assured Guaranty Sues GMAC Entities in Connection with RMBS Insurance

On May 11, 2012, Assured Guaranty filed suit in the United States District Court for the Southern District of New York against several GMAC entities alleging that the defendants induced Assured to issue financial guaranty insurance for certain RMBS by making misrepresentations about the underlying mortgage loans. Assured’s allegations concern two securitizations, one issued in 2004 and one in 2008, with respect to which Assured has thus far paid out $55.7 million in claims. Assured alleges that the defendants violated their own underwriting standards and contractual loan-level repurchase obligations. Assured asserts causes of action for breach of contract, indemnification, and reimbursement, and seeks compensatory damages. Complaint.

Assured Guaranty and Deutsche Bank Settle RMBS Claims for $165.6 Million

On May 10, 2012, Assured Guaranty announced that it had reached a $165.6 million settlement with Deutsche Bank resolving claims related to RMBS transactions issued, underwritten or sponsored by Deutsche Bank that were insured by Assured Guaranty under financial guaranty insurance policies. The settlement also resolved claims related to RMBS exposures in re-securitization transactions on which Assured Guaranty provided credit protection through credit default swaps. The claims resolved by this settlement were not yet in litigation. Press Release.

Monoline Insurer Assured Files Suit Against DLJ and Credit Suisse

On October 17, 2011, Assured Guaranty Municipal Corp. filed a lawsuit in the Supreme Court of New York against DLJ Mortgage Capital, Inc. and Credit Suisse Securities for breaches of mortgage representations and repurchase obligations in connection with six RMBS. Assured, which insured the securities, alleges that DLJ warranted and vouched for the quality of the loans and agreed to repurchase, substitute, or cure any loans that breached the warrantees. Assured also alleges that its forensic re-underwriting review revealed that 93% of the underlying loans did not meet the agreed-upon qualifications. Assured asserts claims for breach of contract and declaratory judgment. Complaint.

S.D.N.Y. Trims Assured’s Claims Against Flagstar

On July 7, 2011, Southern District of New York Federal Judge Jed Rakoff partially granted Flagstar Bank’s (“Flagstar”) motion to dismiss claims brought by Assured Guaranty (“Assured”). The Court sustained two claims for breach of contract, but limited Assured’s remedy to Flagstar’s “cure or repurchase” obligations and dismissed two additional claims for reimbursement and indemnification. Assured had alleged that Flagstar misled it about the characteristics of the loans, mortgagors, and the underlying properties and that, when Assured did its own investigation, it found that the majority of the sampled loans violated Flagstar’s underwriting guidelines. The court issued the ruling without a full opinion, which will be issued later. Order