MBIA Insurance has filed a motion in the New York State Supreme Court seeking documents from Credit Suisse about RMBS it insured.

According to the lawsuit, Credit Suisse failed to follow guidelines it established with the insurer and MBIA has suffered large losses as a result.

In the filing MBIA disclosed that the Securities and Exchange Commission has subpoenaed it and Credit Suisse seeking the same kinds of documents.

The original lawsuit dates back to December 2009 when the bond insurer filed a complaint alleging it was “fraudulently induced” by Credit Suisse to provide its guarantee on $900 million of RMBS.

MBIA charged Credit Suisse with “pervasive and material misrepresentations” in its 2007 descriptions of various mortgages that it pooled together, put in a trust, and then securitized into MBS that MBIA guaranteed.

The securitization is called HEMT 2007-2.  The loans defaulted during the financial crisis and MBIA says it has paid out millions of dollars in claims. It is looking to recoup those losses on the grounds that Credit Suisse lied and misrepresented the quality of those loans to MBIA.

The motion seeking the documents was filed last Thursday.

The Credit Suisse suit is one of five cases MBIA has filed against financial institutions for which it insured RMBS. The motion seeks access to documents that MBIA said will show that Credit Suisse knew the loans they purchased from the originators did not comply with the representations it made in connection with the securitization.

Instead of informing the parties to the transaction about the breaches of representations and warranties and repurchasing the loans, Credit Suisse instead engaged in “double-dipping,” the insurer charged.

MBIA alleges that this allowed Credit Suisse to gain undisclosed profits on two fronts. One was the fees the bank charged to purchase the loans from the originators. The other was additional profits made when it received compensation from the originators for the defective loans but failed to either remit these payments to the trust, which rightfully owned the loans, or to repurchase the defective loans out of the trust.

According the court filings, MBIA said Credit Suisse fraudulently induced it to participate in the bond deal “in part, to obtain double recoveries on the defective loans by shoveling them into the trust, profiting from their securitization, and then recovering [profits] again when it demanded that the originators of those loans repurchase them, even though Credit Suisse no longer owned the loans.”

MBIA also alleges that Credit Suisse initially denied ever seeking to put defective loans back to the originators.

“As just one example of the prejudice cause by Credit Suisse’s evasions, in the last few weeks since filing this motion, MBIA has discovered a serious irregularity in a number of HEMT 2007-2 loans: these loans were previously securitized by Credit Suisse and then repurchased by Credit Suisse as defective,” the insurer said. “Upon repurchasing these defective loans, Credit Suisse assigned them new loan identification numbers, wiping the slate clean.”

A spokesman for MBIA said, “We feel that the information in our filings provides a compelling basis for the court to grant our motion for additional discovery related to Credit Suisse’s wrongdoing.” He declined to provide further comment.

A Credit Suisse spokesman said, “MBIA is entitled to what its contracts with Credit Suisse provide, and not more.”

The SEC has also subpoenaed the counsel for both MBIA and Credit Suisse to obtain the documents.

“Credit Suisse is now the subject of an investigation by the Securities and Exchange Commission, which issued a subpoena this week seeking the same types of documents as MBIA seeks with this motion,” according to court documents.

A Credit Suisse spokesman declined to comments on the SEC subpoena.

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