NEW YORK — Allstate has filed a federal lawsuit against Countrywide Financial over $700 million in toxic mortgage-backed securities that the insurer bought beginning in 2005, only to see their value decline rapidly.
The suit, filed Monday in Manhattan federal court, targets Countrywide, its co-founder and longtime chief executive Angelo Mozilo and other executives, as well as Bank of America, which bought the mortgage giant in 2008.
Allstate maintains that beginning in 2003, Countrywide abandoned its underwriting standards and misrepresented crucial information about the underlying mortgage loans that made up the securities it sold. The company presented securities backed by the mortgages as safe investments by concealing material facts, the suit alleges.
The Northbrook, Ill.-based home-and-auto insurer bought the securities in question between March 2005 and June 2007. Allstate says its claims are based on analysis of the loans underlying the securities, internal Countrywide documents and complaints filed against Countrywide by others.
