AIG continues the country's unity over loan losses

 

Monday, Mar 23,2009, 11:23:59 PM   Click:

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LOS ANGELES_A unit Embattled insurer American International Group Inc has filed suit against mortgage lender Countrywide Financial Corp. in California federal court Thursday, alleging Countrywide misrepresented the health of loans the company has provided, resulting in massive losses.

United Guaranty Mortgage Indemnity Co. has filed an action in District Court of the United States, accusing the country of breach of contract, fraud, negligence and unfair business practices.

United Guaranty alleges Countrywide "abandoned its own underwriting guidelines to increase its market share and distorted the quality of its loans, so that United Guaranty to provide insurance coverage for them."

AIG is seeking unity unspecified punitive damages and wants the insurance policies on loans and payments on the policies to be canceled.

Charlotte, North Carolina, Bank of America bought Countrywide in July 2008 for about $ 2.5 billion in a stock deal. Countrywide was the largest mortgage lender at the time of acquisition. But like most lenders, the company was hit hard by a sharp rise in defaults over the past 18 months. Bank of America has received billions of dollars in federal assistance in order to absorb losses related to mortgages of Countrywide and its latest acquisition of Merrill Lynch.

AIG, once the largest insurer in the world, recently reported a fourth quarter 2008 loss of $ 61.7 billion _ the biggest quarterly loss in company history _ U.S. related to subprime and default values of market turmoil. The company, which received more than $ 170 million of government assistance, outraged by the legislature has to pay 165 million dollars in bonuses, including operators in the financial products unit that nearly caused the collapse of AIG.

For its part, the country is the target of several lawsuits related to the collapse of mortgages.

Calls and emails to counsel for the AIG and the search for representatives of the country do not comment immediately returned late Thursday.



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