Lawsuit: Countrywide, GMAC Duped Investor Out Of Hundreds Of Million$ In Exchange For Crappy Mortgage Securities

In Hennepin County, Minnesota, the Minneaplois Star Tribune reports:

• Thrivent Financial for Lutherans has sued Countrywide Financial Corp. and GMAC Mortgage over what it describes as "massive frauds" in which it says it was duped into buying hundreds of millions of dollars in mortgage-backed securities.
• Thrivent says it wanted conservative, low-risk investments and believed it was buying only those mortgages that carried the highest, AAA investment-grade ratings. But because Countrywide and GMAC failed to follow their underwriting guidelines, Thrivent says, it ended up holding higher-risk mortgages and has suffered huge losses amid the housing market collapse.
• Between 2005 and 2007, the suit says, Minneapolis-based Thrivent and its affiliates paid hundreds of millions of dollars for 20 mortgage-backed securities offerings from Countrywide and for seven offerings from GMAC. The suit says that two firms either knew or recklessly disregarded the fact that the securities failed to meet the criteria for the AAA ratings they carried.

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• [I]n the rush to increase market share, the suit says, Countrywide disregarded its underwriting guidelines, pressured appraisers to provide inflated valuations, and made more loans to higher-risk borrowers. Thrivent says Countrywide kept the best-quality mortgages for itself and dumped the riskier loans onto Thrivent and others.
• Thrivent made similar allegations against GMAC, citing a number of confidential witnesses who had worked for the company. Thrivent seeks unstated compensatory and/or rescissionary damages, punitive damages and costs.

For more, see Thrivent sues lenders for 'massive frauds' (Countrywide and GMAC both say that Thrivent should have understood the risks of the mortgage-backed securities it bought).