Countrywide Sues AIG Unit

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A legal battle between units of Countrywide Financial Corp. and American International Group Inc. could provide a rare window into the collapse of the financial and real estate markets.

In a lawsuit filed this week, Countrywide Home Loans Inc. complained that the insurer didn’t cover more than $43 million in losses from failed real estate loans, many of which were bundled and sold as securities — even though Countrywide paid more than $342 million in premiums to insure the loans.

In its lawsuit, filed Wednesday in Los Angeles County Superior Court, Countrywide said it made significant disclosures to United Guaranty about borrowers’ credit histories and property appraisals. “United Guaranty understood firsthand the risks associated with the mortgage lending business,” the lawsuit said.



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