(Reuters) – Ambac Assurance Corp. won a bid to reinstate afraudulent inducement claim against a unit of Credit SuisseSecurities over a 2007 mortgage-backed securities transaction Ambacinsured.

Ambac sued for what it called “pervasive and materialmisrepresentations” in the mortgage-backed security transactionpooling over 2,000 residential mortgage loans that Credit Suisseunderwrote and its affiliate, DLJ Mortgage Capital Inc,sponsored.

Credit Suisse may not have had a duty to disclose certaininformation but New York state Supreme Court Justice Shirley WernerKornreich said in a decision filed Thursday that the issue is“fact-intensive” and declined to dismiss the fraudulent inducementclaim “at this time.”

In March 2007, New York-based Ambac issued a policy insuringpayment of the principal and interest due under the $175 millionsecuritization of 2,563 adjustable-rate home equity lines ofcredit.

Ambac claimed that Credit Suisse misrepresented attributes ofthe loans, applied more lax underwriting guidelines and less duediligence than it had claimed. Ambac also alleged that CreditSuisse said the transaction mirrored a prior securitization whilefailing to disclose that loan pool was filled with borrowers withlittle or no ability to repay.

Ambac's suit alleged that loans representing over 33 percent ofthe original loan balance, or more than $58 million, had defaulted,requiring Ambac to make over $46 million in claim payments.

Credit Suisse countered in court papers that “Ambac could haveand should have known of the precise issues of which it nowcomplains. Indeed, if the problems with the loans are as rampantand obvious as Ambac now alleges, then even minimal diligence wouldhave uncovered them.”

Credit Suisse did not return a call for comment.

The case is Ambac Assurance Corporation v. DLJ Mortgage CapitalInc., 60070/2010, New York state Supreme Court (Manhattan).