Allstate sues Countrywide over toxic investments
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.
Allstate alleges that Countrywide abandoned its underwriting standards and misrepresented crucial information about the underlying mortgage loans that made up the securities it sold. Countrywide was the nation’s largest home loan originator. It sold Allstate securities backed by the mortgages as safe investments and concealed material facts.
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