Allstate Corp. has filed a federal lawsuit against Countrywide Financial Corp. 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 CEO Angelo Mozilo and other executives, as well as Bank of America Corp., 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, then the nation’s largest home loan originator, presented securities backed by the mortgages as safe investments to Allstate and others by concealing material facts, the suit alleges.
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