Credit Suisse Group AG (CSGN)’s DLJ Mortgage Capital unit was sued in New York by a trustee for mortgage bond investors claiming $720 million in damages tied to faulty home loans.
U.S. Bancorp (USB:US), the trustee, seeks to force DLJ to repurchase the loans backing the securities, according to a court filing yesterday in New York State Supreme Court.
Mortgages backing the securities were riskier than DLJ promised, leading to a high rate of default and losses of $720 million, according to the filing. U.S. Bancorp is suing at the direction of investors, according to the filing.
“We will vigorously defend against this latest attempt by sophisticated parties to improperly shift responsibility for alleged losses” to Credit Suisse, Steven Vames, spokesman for the Zurich-based bank said in an e-mail.
The case is Home Equity Mortgage Trust Series 2006-1 v. DLJ Mortgage Capital Inc., 156016-2012, New York State Supreme Court (Manhattan).
To contact the reporter on this story: David McLaughlin in New York at firstname.lastname@example.org
To contact the editor responsible for this story: John Pickering at email@example.com