Mortgage Suit Targets the Street
The Federal Home Loan Bank of Seattle has launched a series of lawsuits against Wall Street banks, seeking to force them to buy back souring mortgage-backed securities. In 11 separate lawsuits filed in late December in King County Superior Court in Washington, the Seattle bank alleges that it was misled by underwriters about the quality of $4 billion of securities it purchased as investments at the height of the housing boom. The Seattle bank is seeking to force the firms to repurchase the securities, plus interest. The $4 billion in securities represents the majority of private-label mortgage securities held by the bank, based on its most recent quarterly earnings filings. Private-label securities aren't backed by a government-related entity.