MBIA Hits Flagstar With Suit Over $1B In MBS Deals

Law360, New York (January 11, 2013, 10:38 PM EST) -- Bond insurer MBIA Insurance Corp. sued Flagstar Bancorp Inc. in New York federal court Friday, accusing the bank of misleading the company about purportedly shoddy loans underlying more than $1.02 billion in mortgage-backed securities.

The suit arises from MBIA’s agreement to insure two MBS transactions sponsored by Flagstar in 2006 and 2007 before the global financial downturn, according to the complaint. 

"To induce MBIA to guaranty payments due on certain securities, Flagstar made extensive warranties concerning its loans and operations and attesting to the veracity of...
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