Allstate Files Fifth MBS-Related Lawsuit; Credit Suisse Latest

NU Online News Service, March 1, 1:40 p.m. EST

Allstate Insurance Company has filed its fifth lawsuit in New York against a bank over investment losses on residential mortgage-backed securities.

On Feb. 28 Allstate filed a lawsuit against Credit Suisse Securities and certain affiliates. The insurer said that between 2005 and 2008 it bought more than $231 million in mortgage-backed securities from the bank, which omitted information or gave untrue statements about the quality of the mortgages, Allstate alleges.

With the latest lawsuit, Allstate is seeking to recover losses of more than $2 billion from the five banks it is suing.

In each suit, Allstate seeks damages including rescission, monetary losses, attorneys’ fees and costs, and prejudgment interest, the insurer said.

Less than a week ago Allstate filed a suit against Citigroup and Deutsche Bank. The Northbrook, Ill.-based insurer said it bought more than $200 million in mortgage-backed securities from Citigroup’s Citimortgage Inc., and during the same time Allstate purchased about $185 million of the securities from defendants Ace Securities Corporation and Deutsche Bank Securities Inc.

In February a suit was also filed against J.P. Morgan Chase & Co. over more than $750 million in mortgage-backed securities purchased.

Allstate Insurance Co. in January filed a federal lawsuit against Bank of America’s Countrywide Financial Corp., seeking damages related to its purchases of more than $700 million in mortgage-backed securities from the company.

Countrywide has also been sued by Ambac, which wrote financial guaranty insurance policies for Countrywide.