CIFG Assurance North America Inc. asked a judge to let it add shuttered loan originator GreenPoint Mortgage Funding Inc. to a lawsuit against Goldman Sachs Group Inc. (GS) over $275 million in mortgage-backed securities.
The insurer sued Goldman Sachs in New York State Supreme Court in Manhattan in August, accusing the investment bank of making misrepresentations in connection with the securitization of a portfolio of 6,204 mortgage loans.
In court documents filed yesterday, CIFG asked Justice O. Peter Sherwood to allow it to add GreenPoint as a defendant if a motion by Goldman Sachs to dismiss the complaint isn’t granted, saying that GreenPoint originated a “substantial” number of the loans involved in the securitization.
“GreenPoint was not included in the original complaint because GreenPoint’s contractually provided time to respond to CIFG’s demand that it repurchase defective loans had not yet expired,” CIFG said in yesterday’s filing. “Post-complaint correspondence with GreenPoint has now confirmed that GreenPoint will not comply with CIFG’s repurchase demand.”
Goldman Sachs in October asked the court to throw out the lawsuit, saying CIFG was informed of the risks associated with the investments, failed to conduct its own due diligence and hasn’t sought “clear contractual remedies” that would allow it to seek the repurchase of specific loans.
In a letter to Sherwood dated yesterday, lawyers for Goldman Sachs called CIFG’s request an “inappropriate maneuver” that would impose “needless burden” on the court and the parties involved.
Justice Bernard Fried on Feb. 24 denied a motion by CIFG and Syncora Guarantee Inc. to bring new claims against GreenPoint in a lawsuit over the quality of $1.8 billion of home-equity loans the two insurers guaranteed.
Fried in March 2010 threw out the original 2009 lawsuit, which accused the loan originator of violating its mortgage- underwriting guidelines.
Capital One Financial Corp. (COF) shut Novato, California-based GreenPoint in August 2007, less than a year after acquiring its parent company, Long Island’s North Fork Bancorp. Julie Rakes, a spokeswoman for McLean, Virginia-based Capital One, said in an e-mail that the company doesn’t comment on pending litigation.
The case is CIFG Assurance North America Inc. v. Goldman, Sachs & Co., 652286/2011, New York Supreme Court, New York County (Manhattan).
To contact the reporter on this story: Chris Dolmetsch in New York at firstname.lastname@example.org