Bloomberg News

Assured Guaranty MBS Suit Against UBS Moved to U.S. Court

March 05, 2012

Assured Guaranty Ltd.’s (AGO) lawsuit against a UBS AG (UBSN) unit accusing the company of failing to meet obligations related to the pooling of residential mortgage- backed securities was moved to federal court.

The lawsuit, filed in New York State Supreme Court in Manhattan on Feb. 2, was moved to U.S. District Court for the Southern District of New York, according to documents filed today in state court.

Assured Guaranty Municipal Corp., a New York-based unit of the Hamilton, Bermuda-based insurer, accused Wilmington, Delaware-based UBS (UBS) Real Estate Securities Inc. of failing to abide by obligations under pooling and servicing agreements related to residential mortgage-backed securities sold in three offerings in 2006 and 2007.

UBS said Assured Guaranty is a “sophisticated market participant” and understood the risks it was taking when it agreed to insure about $1.5 billion in securities backed by “high-risk mortgages.”

Pools of home loans securitized into bonds were a central part of the housing bubble that helped send the U.S. into the biggest recession since the 1930s. The housing market collapsed, and the crisis swept up lenders and investment banks as the market for the securities evaporated.

The case is Assured Guaranty Municipal Corp. v. UBS Real Estate Securities Inc., 650327/2012, New York State Supreme Court (Manhattan).

To contact the reporter on this story: Chris Dolmetsch in New York at cdolmetsch@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net


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