FGIC Says Ally Lied To Get Coverage For $4B MBS Sales

Law360, New York (November 30, 2011, 7:18 PM EST) -- Financial Guaranty Insurance Co., the subsidiary of bankrupt insurance holding company FGIC Corp., on Tuesday unleashed three lawsuits against Ally Financial Inc.’s mortgage units, claiming they lied to obtain policies covering the sale of $3.8 billion of mortgage-backed securities and otherwise breached their insurance contracts.

Filing suit in New York state court, bond insurer FGIC alleges that the Ally affiliates fraudulently obtained insurance for three mortgage-backed securities transactions in 2005 and 2006 by misrepresenting the quality of the underlying loans. FGIC has been hammered with hundreds...
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