FHLB San Francisco Sues Nine Dealers in MBS Lawsuit
March 19, 2010
The Federal Home Loan Bank of San Francisco (FHLB San Francisco) has sued nine securities dealers that sold the GSE nearly $20 billion in private-label MBS.
The San Francisco bank, like other FHLBs, suffered losses due to its investment in AAA-rated private-label MBS.
The complaint filed in Superior Court in the County of San Francisco, alleges that the dealers made "untrue or misleading statements" about the characteristics and quality of the mortgage loans underlying the securities.
The San Francisco FHLB is seeking to rescind those MBS purchases, which originally cost $19.1 billion. In February, the Seattle FHLB filed a similar lawsuit against issuers to compel them to buy back $4 billion in private-label MBS.