Allstate Corp. sued Bank of America Corp. and its Countrywide mortgage unit over $700 million in residential mortgage-backed securities the insurer purchased, claiming Countrywide misrepresented the investments.
“Countrywide was singularly focused on increasing its market share, offloading the risk onto Allstate and other institutional investors that purchased securities backed by pools of Countrywide’s mortgages,” Allstate said in a complaint filed in federal court in Manhattan yesterday.
Allstate, based in Northbrook, Illinois, said in the complaint that the investments suffered “drastic and rapid loss in value” as a result of the poor quality of the loans underlying them.
In addition to Bank of America and Countrywide, the suit names as defendants former Countrywide officials including the company’s former chairman and chief executive officer, Angelo Mozilo. The suit seeks unspecified damages.
The case is Allstate Insurance Co. v. Countrywide Financial Corp., 10-cv-9591, U.S. District Court, Southern District of New York (Manhattan).
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