Sunday, October 17, 2010

The MERS Mess (Sorta) Gets Real: Fraud Suits Filed

We're at Stage Three.

Today the Federal Home Loan Bank of Chicago will file complaints against several
defendants regarding some of the private-label mortgage-backed securities (MBS) they
sold us between 2005 and 2007. We contend that the quality of the loans that comprise
the pools of securities cited in today’s complaints was inconsistent with the description in
the pre-purchase documents prepared by the underwriters and issuers of the securities.
Relying on the pre-purchase documents, we invested in these securities with the
understanding that we were purchasing higher-quality instruments than turned out to be
the case. After careful consideration, we have concluded that we have an obligation to
you, our members, to do everything we can to recover the value lost from investing in
these securities. --FHLB/Chicago 10/15/10

Technically, this is not "MERS"--which is a clearinghouse for mortgage securitizations that has its own troubles, called "Oooops! We forgot the original papers!!!"

This is the FRAUD suit. And it ain't the only one.

The Federal Home Loan Bank of Indianapolis also filed similar complaints today. The Federal Home Loan Banks of Pittsburgh, Seattle, and San Francisco have previously filed similar lawsuits.

HT: Ticker

1 comment:

Tim Morrissey said...

Anybody wanna buy a foreclosed-on property? ......didn't think so.