The multi-billion dollar suit is for mortgage securities impacted by the housing downturn
By Erik Larson
(Bloomberg) -- Pacific Investment Management Co. sued Citigroup Inc. over the bank’s role as trustee for $13.8 billion of mortgage-backed securities made toxic when the housing bubble burst, leading to "substantial damages."
The lawsuit by more than two dozen Pimco trusts was filed Tuesday in New York state court in Manhattan. According to the complaint, subsidiary Citibank NA knew the pools of loans backing the trusts from 2004 to 2007 were filled with defective mortgages.
Prudential Retirement Insurance& Annuity Co. and Aegon NV, the Dutch owner of U.S. insurer Transamerica Corp., joined the Pimco trusts in the complaint. The claims include breach of contract and breach of fiduciary duty.
"Citibank knew that the pools of loans backing the trusts were filled with defective mortgage loans that materially breached seller representations and warranties," the trusts said in the complaint. The "abysmal performance" of the trust collateral included "spiraling defaults, delinquencies and foreclosures."
Citigroup spokeswoman Danielle Romero-Apsilos declined to comment on the lawsuit.
The bank’s monthly reports showed that by January 2009, the trusts had losses of more than $183.4 million, according to the complaint. The plaintiffs didn’t say how much in damages they’re seeking.
(Bloomberg) -- Pacific Investment Management Co. sued Citigroup Inc. over the bank’s role as trustee for $13.8 billion of mortgage-backed securities made toxic when the housing bubble burst, leading to "substantial damages."
The lawsuit by more than two dozen Pimco trusts was filed Tuesday in New York state court in Manhattan. According to the complaint, subsidiary Citibank NA knew the pools of loans backing the trusts from 2004 to 2007 were filled with defective mortgages.
Prudential Retirement Insurance& Annuity Co. and Aegon NV, the Dutch owner of U.S. insurer Transamerica Corp., joined the Pimco trusts in the complaint. The claims include breach of contract and breach of fiduciary duty.
"Citibank knew that the pools of loans backing the trusts were filled with defective mortgage loans that materially breached seller representations and warranties," the trusts said in the complaint. The "abysmal performance" of the trust collateral included "spiraling defaults, delinquencies and foreclosures."
Citigroup spokeswoman Danielle Romero-Apsilos declined to comment on the lawsuit.
The bank’s monthly reports showed that by January 2009, the trusts had losses of more than $183.4 million, according to the complaint. The plaintiffs didn’t say how much in damages they’re seeking.
