Mortgage Loan Compliance | Insurer Sues Goldman Sachs For Bad Loans

Monday in New York State Supreme Court a subsidiary of Allstate Insurance Co. sued Goldman Sachs Group Inc., saying that Goldman's characterizations of the investments were "revealed to the public by the numerous governmental investigations into Goldman's role in the market's collapse."

Allstate Corp. is suing Goldman claiming the broker fraudulently sold it more than $123 million in mortgage-backed securities in 2006 and 2007, before the housing market collapse sent the investments' value plunging.

The insurer claims in a lawsuit filed in New York that the documents Goldman provided at the time "contained untrue statements and omitted material facts" about the mortgages underlying the investments.

"Goldman knew these types of securities were, to use Goldman's own words,”junk,” “dogs,” “crap” and “lemons,” according to the complaint.

The lawsuit alleges Goldman violated state laws against fraud and negligent misrepresentation, and it seeks unspecified damages from Goldman and certain affiliates.
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