HSH Nordbank Sues Golman Sachs Over Mortgage Securities

HSH Nordbank AG, a German regional lender bailed out during the financial crisis, sued Goldman Sachs Group Inc. (GS) and Morgan Stanley (MS) over more than $634 million in residential mortgage-backed securities.

HSH Nordbank accused Goldman Sachs and Morgan Stanley, both based in New York, of making “material misrepresentations and omissions” about the underwriting standards used to issue mortgage loans that were pooled together into the securities, according to documents filed Aug. 24 in New York State Supreme Court in Manhattan.

Goldman Sachs declined to comment on the lawsuit, Tiffany Galvin, a company spokeswoman, said in a telephone interview. Lauren Onis, a spokeswoman for Morgan Stanley, declined to comment on the lawsuit immediately in a telephone interview.

HSH Nordbank sued Goldman Sachs over $110 million in mortgage securities and Morgan Stanley over $524 million of the investments, according court papers.

Pools of home loans securitized into bonds were a central part of the housing bubble that helped send the U.S. into the biggest recession since the 1930s. The housing market collapsed, and the crisis swept up lenders and investment banks as the market for the securities evaporated.

HSH Nordbank, based in Hamburg, is one of a group of regional German lenders sued in state court in Manhattan over mortgage-backed securities during the past year. Other banks sued by HSH Nordbank include UBS AG and Barclays Plc.

The new cases are HSH Nordbank AG v. Morgan Stanley, 652988/2012, and HSH Nordbank AG v. Goldman Sachs Group Inc., 652991/2012, New York State Supreme Court, New York County, (Manhattan).

To contact the reporter on this story: Chris Dolmetsch in New York at cdolmetsch@bloomberg.net.

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net.

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