Allstate Corp. has filed a federal lawsuit against Bank of America Corp. over more than $700 million in losses from mortgage-backed securities (MBS) it bought from Countrywide Financial Corp., which the bank purchased in 2008. Allstate is also suing 18 other defendants, including Angelo Mozilo, the former Countrywide CEO.
According to a Reuters report, the Northbrook, Ill.-based Allstate is seeking the rescinding of its securities purchases along with unspecified damages. Allstate's 150-page complaint charges that Countrywide began to loosen its underwriting standards in 2003, knowing that this would lead to problems.
‘Defendants knew the loans off-loaded onto Allstate were a toxic mix of loans given to borrowers that could not afford the properties, and thus were highly likely to default,’ said Allstate in its lawsuit.