Credit Suisse Sued by N.J. Over $10 Billion in Mortgages
Credit Suisse Group AG (CSGN) was sued by New Jersey over claims the bank misrepresented the risk to investors in more than $10 billion in residential mortgage-backed securities.
The state claims Credit Suisse Securities (USA) LLC and two affiliates misled investors about defects in securities issued in 2006 and 2007. The bank didn’t disclose that loans failed to meet underwriting standards and originators had “poor track records characterized by alarming levels of defaults and delinquencies,” New Jersey claimed.
Flagstar to Sell $40.7B of Servicing Rights
Flagstar Bancorp (FBC) has agreed to sell the majority of its mortgage-servicing rights but will retain the subservicing rights, the Troy, Mich., company said Wednesday.
The $11.8 billion-asset Flagstar will sell residential mortgage-servicing rights with an unpaid principal balance of about $40.7 billion, which represents 55% of its portfolio of loans serviced for others, it said. The buyer is Matrix Financial Services, a subsidiary of the Maryland firm Two Harbors Investment Corp.
Flagstar will be the subservicer for all mortgages associated with the rights being sold and will retain subservicing income and fees, it said. Flagstar expects the deal to close before the end of the year.