FGIC Targets Ally Financial Over $2B In Risky MBS

Law360, New York (March 14, 2012, 5:19 PM EDT) -- Financial Guaranty Insurance Co. on Monday slapped Ally Financial Inc. with a second suit in as many weeks, saying Ally through one of its subsidiaries intentionally duped the insurer into backing two sets of mortgage-backed securities transactions worth a combined $1.87 billion.

GMAC Mortgage Corp., which is owned by Ally's direct subsidiary Residential Capital LLC, intentionally and materially misrepresented the quality of the mortgage loans, including their credit quality, selection and evaluation, to boost FGIC's confidence in the deal, the suit says. The insurer's backing ultimately...
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