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I 999PA,M4CBRIDE, SQUERI, DAY & LAMPREY,LLP

ROBERTA. GOODIN,StateBarNo.061302
2 rgoodin@goodinmacbride. com
FRANCINET. RADFORD,StateBarNo. 168269
fradford(@eoodinmacbride.com
"4"*&*r#,-P
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ANNE H. HARTMAN, StateBarNo. I84556


4 ahartman@goodinmacbri de.com
505Sansome Street,Suite900 f,lAR
1 5 ?010
5 SanFrancisco,Califomia 94lll
Telephone: (415)392-7900 CLE
6 Facsimile: (415)398-4321
Eff:
7 GRAIS& ELLSWORTHLLP
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p+Yl-D_J-gBAf q @:g ltgSgpp Ii cat ion submi tted her ewi th)
8 KATHRYN C. ELLS_WQRT$Qtrohacapp.submittedheiewith)
OWEN L. CYRULNIKQtTohac applicationsubmittedherewithj
9 70 East55thStreet
New York, New York 10022
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l0 Telephone: (212)755-0100 CASE MANAGEMENT
CONFERENCE
SET
Facsimile: (212)755-0052
l1 AU(j13 Ttlitr $NAM
Attomeysfor Plaintiff DLPAATMENT2I2
l2 FederalHomeLoanBank of SanFrancisco
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IN THE SUPERIORCOURTOF THE STATE OF CALIFORNIA
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IN AND FORTHE CITY AND COUNTYOF SAN FRANCISCO
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t6 cGC.10 .497840
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FEDERALHOME LOAN BANK OF SAN No.


t7 FRANCISCO,
COMPLAINT FOR RESCISSIONAND
l8 Plaintiff. DAMAGES FOR:
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t9 v. (1) VTOLATTONSOF $$ 2s40rAND


2550TOF THE CALIF'ORNIA
20 CREDITSUISSESECURITIES(USA) LLC,
F/KIA CREDITSUISSEFIRSTBOSTON CORPORATESECURITIESACT;
2T LLC;
CREDITSUISSEFIRSTBOSTON (2) VTOLATTONSOF $S11 AND ls OF
22 MORTGAGESECURITIESCORP.: THE SECURITIESACT OF 1933;
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DEUTSCHEBANK SECURITIES. iNC.:


23 DEUTSCHEALT-A SECURITIBS. TWC.: (3) vIoLATIoNS oF $$ rz(a)Q) AND
J.P.MORGANSECURITIES, TNC; FIW'A 15 OF THE SECURITIESACT OF
24 BEAR STEARNS& CO.,INC.;
STRUCTUREDASSETMORTGAGE 1933;
25 INVESTMENTSII. INC.:
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THE BEAR STEARNSCbITIPENIES.LLC. (4) VTOLATTONSOF $$ 1s72AND 1710


26 FlKlA THE BEAR STEARNSCOMPANIES. OF THE CALIFORNIA CIVI
INC.; CODE (NEGLIGENT
27 RBSSECURITIES, fNC., FlWA MISREPRESENTATION); and
GREENWICHCAPITAL MARKETS,INC.;
28 RBSACCEPT INC. F/K/A
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COMPLAINT
I GREENWICHCAPITAL ACCEPTANCE. (s) RESCTSSTON OF CONTRACTS
INC.; UNDER S 1689ET SEQ.OF THE
2 MORGANSTANLEY& CO.
INCORPORATED; CALIFORNIA CIVL CODE
UBS SECURITIES,
LLC;
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MORTGAGEASSETSECURITIZATION
4 TRANSACTIONS,INC.;
BANC OF AMERICA SECUzuTIES
LLC:
) BANC OF AMERICA FUNDING
CORPORATION;
6 BANC OF AMEzuCA MORTGAGE
SECUzuTIES,INC.;
7 COUNTRYWIDESECURITIES
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CORPORATION;
8 CWALT,INC.;
COUNTRYWIDEFINANCIAL
9 CORPORATION;AND,
DOESt-50.
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Defendants.
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13 Plaintiff, FEDERALHOME LOAN BANK oF SAN FRANCISCo (referredto in

t4 this complaint as the Bank), alleges,basedupon its continuing investigation, including the

l5 continuing investigation of its counsel,that the following allegationsand other factual

t6 have evidentiary support or, where specifically identified as being pled "on information and
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t7 belief," are likely to have evidentiary support after a reasonableopportunity for further

18 investigation or discovery.
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l9 NATURE OF THIS ACTION

20 l. This is an action for rescissionand damagesas a result of the violation by the

2T Defendantsof the California CorporateSecuritiesAct, the federal SecuritiesAct of 1933,the

22 California Civil Code, and the common law. As alleged in detail below, the Defendantssold or
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23 issuedto the Bank 98 certificates in 80 securitizationtrusts backedby residential mortgage loans.

24 The Bank paid more than $13.7 billion for those certificates.When they offered and then sold

25 thesecertificatesto the Bank, the Defendantsmade numerousstatementsto the Bank about the
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26 certificates and the credit quality of the mortgage loans that backedthem. On information and

27 belief many of those statementswere untrue. Moreover, on information and belief the

28 Defendantsomitted to statemany material facts that were necessaryin order to make their
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COMPLAINT
I statementsnot misleading. For example,the Defendantsmade untrue statements,or omitted

2 important information, about such material facts as the percentageof equity that borrowers had in

their homes,the number of borrowers who actually lived in the housesthat securedtheir loans,
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4 the credit scoresof the borrowers, and the businesspracticesof the lendersthat made the loans.

) The Bank reasonablyand justifiably relied on theseuntrue statementsand omissionsof important

6 information in deciding to purchasethe certificates.The certificates are'osecurities"within the

7 meaning of the Califomia CorporateSecuritiesAct and the SecuritiesAct of 1933.Under those


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8 Acts, the California Civil Code, and the common law, the Bank is entitled to rescind its purchase

9 of the certificates or to be paid damagesfor its losseson the certificates.


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l0 2. Eight securitiesdealerssold thesecertificatesto the Bank. Those dealersare

11 DefendantsCredit SuisseSecurities(USA) LLC (which sold to the Bank certificates in l0

I2 securitizationtrusts, which are referred to in this complaint as SecuritizationsNos. I through 10),


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l3 DeutscheBank Securities,Inc. (21 securitizations,


Nos. I I through 31), Bear Steams& Co. Inc.

T4 (10 securitizations,Nos. 32 through 41), Greenwich Capital Markets, Inc. (three securitizations,

l5 Nos. 42 through 44), Morgan Stanley & Co. Inc. (three securitizations,Nos. 45 through 47), UBS

t6 Securities,LLC (12 securitizations,Nos. 48 through 59), Banc of America SecuritiesLLC (15


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t7 securitizations,Nos. 60 through 74), andCountrywide SecuritiesCorporation (six securitizations,

18 Nos. 75 through 80). The other Defendantsnamed in this complaint are liable to the Bank
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t9 becausethey were the issuersof some of those certificatesor becausethey controlled one of those

20 issuers.

2l PARTIES

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3. Plaintiff is a bank createdby the FederalHome Loan Bank Act. The headquarters

23 of the Bank are in the City and County of San Francisco.Under its Organization Certificate, the

24 Bank is to operatein FederalHome Loan Bank District 11, which comprisesthe Statesof

25 Arizona, Califomia, and Nevada.The Bank does operatein each of those three States.
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26 4. Defendant Credit SuisseSecurities(USA) LLC (formerly known as Credit Suisse

27 First Boston LLC and referred to as Credit Suisse)is a limited liability company organizedunder

28 the laws of Delaware. Credit Suissesold the Bank l0 of the certificates.


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COMPLAINT
I 5. Defendant Credit SuisseFirst Boston Mortgage SecuritiesCorp. (referred to as

2 CSFB Mortgage Securities) is a corporation organizedunder the laws of Delaware. CSFB

Mortgage Securitieswas the issuer of five of the certificatesthat Credit Suissesold to the Bank.
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4 6. Defendant DeutscheBank Securities,Inc. (refened to as Deutsche) is a

5 corporation organizedunder the laws of Delaware. Deutschesold the Bank 2l of the certificates.

6 7. DefendantDeutscheAlt-A Securities,Inc. (referred to as Deutsche Alt-A) is a

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corporation organizedunder the laws of Delaware. DeutscheAlt-A was the issuerof five of the

8 certificatesthat Deutschesold to the Bank.

9 8. Defendant J.P. Morgan Securities,Inc. (formerly known as BearoSteams& Co.


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10 Inc. and referred to as Bear Stearns) is a corporation organizedunder the laws of Delaware. Bear

11 Stearnssold the Bank 10 of the certificates.

t2 9. Defendant StructuredAsset Mortgage InvestmentsII, Inc. (referred to as SAMI II)


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13 is a corporation organizedunder the laws of Delaware. SAMI II was the issuer of six of the

t4 certificatesthat Bear Stearnssold to the Bank.

15 10. Defendant The Bear StearnsCompanies,LLc(formerly known as and referred to


l6 as The Bear Stearns Companiesr lnc.) is a limited liability company organizedunder the laws
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I7 of Delaware. The Bear StearnsCompanies,Inc. controls or controlled SAMI II. Under Section l5

18 of the SecuritiesAct of 1933,15 U.S.C. $77o,The Bear SteamsCompanies,Inc. thereforeis


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l9 liable to the Bank jointly and severally with, and to the sameextent as, SAMI II.

20 I 1. Defendant RBS Securities,Inc. (formerly known as Greenwich Capital Markets,

2l Inc. and referred to as Greenwich Capital) is a corporation organizedtrnderthe laws of


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22 Delaware. Greenwich Capital sold the Bank three of the certificates.

23 t2. Defendant RBS.{cceptance,Inc. (formerly known as Greenwich Capital

24 Acceptance,Inc. and referred to as Greenwich Capital Acceptance) is a corporation organized

25 under the laws of Delaware. Greenwich Capital Acceptancewas the issuer of one of the
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26 certificatesthat Greenwich Capital sold to the Bank.

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COMPLAINT
I l3' DefendantMorganStanley& Co. Incorporated(refenedto asMorgan Stanley)is
2 a corporationorganizedunderthe lawsof Delaware.MorganStanleysoldthe Bankthreeof the
3 certificates.
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4 14. DefendantUBS Securities,LLC (referredto asUBS) is a limited liability company
5 organizedunderthe lawsof Delaware.UBS soldthe Bank l2 of the certificates.
6 15. Defendant Mortgage Asset SecuritizationTransactions,Inc. (referredto as MAS

7 is a corporation organizedunder the laws of Delaware.MAST was the issuerof six of the
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8 certificatesthat UBS sold to the Bank.

9 16. Defendant Banc of America SecuritiesLLC (referred to as Banc of America) is a


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10 limited liability company organizedunder the laws of Delaware. Banc of America sold the Bank

il l5 of the certificates.

l2 17. Defendant Banc of America Funding Corporation (referred to as Banc of America


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13 Funding) is a corporation organizedunder the laws of Delaware. Banc of America Funding was

t4 the issuer of sevenof the certificatesthat Banc of America sold to the Bank.

15 18. Defendant Banc of America Mortgage Securities,Inc. (referredto as Banc of

t6 America Mortgage Securities) is a corporation organizedunder the laws of Delaware. Banc of


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I7 America Mortgage Securitieswas the issuer of sevenof the certificates that Banc of America sold

18 to the Bank.
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l9 19. Defendant Countrywide SecuritiesCorporation (referred to as Countryrvide) is a

20 corporation organizedunder the laws of Califomia. Countrywide sold the Bank six of the

2l certificates.
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22 20. Defendant CWALT, Inc. (referredto as CWALT) is a corporation organized

23 under the laws of Delaware. CWALT was the issuerof three of the certificatesthat Credit Suisse

24 sold to the Bank, I 5 of the certificatesthat Deutschesold to the Bank, one of the certificatesthat

25 Bear Steamssold to the Bank, two of the certificatesthat Greenwich Capital Markets sold to the
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26 Bank, three of the certificatesthat Morgan Stanley sold to the Bank, six of the certificatesthat

27 UBS sold to the Bank, one of the certificatesthat Banc of America sold to the Bank. and five of

28 the certificatesthat Countrywide sold to the Bank.


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COMPLAINT
I 21. Defendant Countrywide Financial Corporation is a corporation organizedunder

2 the laws of Delaware. Countrywide Financial Corporation controls or controlled CWALT. Under
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Section 15 of the SecuritiesAct Countrywide Financial Corporation therefore is liable to the
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4 Bank jointly and severally with, and to the sameextent as, CWALT.

5 22. Plaintiff is ignorant of the true namesand capacitiesof Defendantssuedherein as

6 Does l-50, inclusive, and therefore suestheseDefendantsby such fictitious names.Plaintiff will

7 amendthis complaint to allege the true namesand capacitiesof theseDefendantswhen


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8 ascertained.Plaintiff is informed and believesthat each of the fictitiously named Defendants

9 is responsiblein some manner for the occurrencesalleged herein and proximately caused
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l0 Plaintiffs damages.

ll JURISDICTION AND VENUE

t2 23. This Court has subject-matterjurisdiction of this action. The Superior Court is a
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l3 court of generaljurisdiction. The Bank seeksrescissionunder Sections 25401and 25501 of the

T4 Califomia CorporateSecuritiesAct, damagesfor negligent misrepresentation,and rescissionof

15 its contractsto purchasethe certificates,all of which relief this Court hasjurisdiction to grant.

t6 Under Section22(a) of the SecuritiesAct of 1933, 15 U.S.C. g 77v(a),this Court alsohas


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I7 jurisdiction over the Bank's causesof action for violation of SectionsI l, l2(a)(2), and 15 of that

l8 Act, l5 U.S.C.$ 771.


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t9 24. Under Section 22(a) of the SecuritiesAct of 1933, "no casearising under this title

20 and brought in any Statecourt of competentjurisdiction shall be removed to any court of the

2l United States."Becauseits activities are not localized in one state,the Bank is not a citizen of any
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22 stateunder28 U.S.C. $ 1332(c),so the Federalcourtshaveno jurisdiction of this action under28

23 U.S.C. $ 1332(a).This action is not removableto Federalcourt.

24 25. This Court has personaljurisdiction over Credit Suisse,Deutsche,Bear Steams,

25 Greenwich Capital, Morgan Stanley, UBS, Banc of America, Countrywide, and CWALT because
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26 each of them is registeredto do businessin California. This Court has personaljurisdiction over

27 all of the Defendantsbecausethey offered and sold the certificatesto the Bank "in California"

28 within the meaning of Section 25008 of the Califomia CorporateSecuritiesAct.


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COMPLAINT
I 26. Venue is proper in this County becausethe Defendantsoffered and sold the

2 certificatesto the Bank in this County, and becausethe violations of law alleged in this

complaint, including the making of materially untrue or misleading statements,occurred in this


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4 County.

5 SECURITIZATION OF MORTGAGE LOANS

6 27. The securitiesthat the Defendantssold the Bank are so-called asset-backed

7 securities, or ABS, createdin a processknown as securitization. Securitizationbegins with loans


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8 (for example, loans securedby mortgageson residentialproperties,credit card loans, etc.) on

9 which the borrowers are to make payments,usually monthly. The entity that makesthe loans is
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l0 known as the originator of the loans. The processby which the originator decideswhether to

l1 make particular loans is known as the undenvriting of loans. In the loan underwriting process,

t2 the originator applies various criteria to try to ensurethat the loan will be repaid. Until the loans
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l3 are securitized,the borrowers on the loans make their loan paymentsto the originator.

t4 CollectivelY, the paymentson the loans are known as the cash flow from the loans.

l5 28. In a securitization,a large number of loans, usually of a similar type, axegrouped

I6 into a collateral pool. The originator of those loans sells them (and, with them, the right to
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t7 receivethe cashflow from them)to a trust. Thetrustpaysthe originatorcashfor the loans.The


l8 trustraisesthe cashto pay for the loansby sellingbonds,usuallycalledcertificates,to investors
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t9 suchasthe Bank.Eachcertificateentitlesits holderto an agreedpart of the cashflow from the


20 loansin the collateralpool.
2l 29. Thus,schematically,
therearesix stepsin a securitization.
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1. Investorspay money to the trust.


23 2. The trust issuescertificatesto the investors.
3. The trust pays money to the originator.
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4. The originator sells to the trust the loans in the collateral pool, including
25 the right to receive the cashflow from those loans.
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5. The trust collects cash flow from paymentson the loans in the
26 collateral pool.
27 6. The trust pays eachcertificateholderits agreedpart of the cashflow that
the trust receivesfrom paymentson loans in the collateral pool.
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COMPLAINT
1
2 30. A few other aspectsof securitizationare significant to the allegationsof this

complaint. Each securitizationhas a sponsor,the prime mover of the securitization. Sometimes


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4 the sponsoris the originator or an affiliate. In originator-sponsoredsecuritizations,the collateral

5 pool usually contains loans made by the originator that is sponsoringthe securiti zation.Other

6 times, the sponsormay be an investmentbank, which purchasesloans from one or more

7 originators, aggregatesthem into a collateral pool, sells them to a trust, and securitizesthem. The
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8 sponsorarrangesfor title to the loans to be transferredto an entity known as the depositor, which

9 then transferstitle to the loans to the trust.


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10 3 1. The obligor of the certificates in a securitization is the trust that purchasesthe

11 loans in the collateral pool. Becausea trust has no assetsother than the loans that it purchased,it

t2 may not be able to satisff the liabilities of an issuerof securities(the certificates).The law
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l3 thereforetreatsthe depositor as the issuer ofan asset-backedcertificate.

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l5 32. Securitiesdealers,like the eightthat soldthe certificatesto the Bank,play a


16 critical role in the processof securitization.
Theyunderwritethe saleof the certificates,that is,
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l7 theypurchasethe certificatesfrom the trust andthensell themto investors.Equallyimportant,


18 securitiesunderwritersprovideto potentialinvestorsthe informationthattheyneedto decide
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t9 whetherto purchasecertificates.
20 33. Becausethe cashflow from the loansin the collateralpool of a securitizationis the
2l sourceof fundsto pay the holdersof the certificatesissuedby the trust,the creditqualityof those
22 certificatesis dependent
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uponthe creditquality of the loansin the collateralpool. Themost


23 importantinformationaboutthe creditqualityof thoseloansis containedin the files thatthe
24 originatordevelopswhile makingthe loans,the so-calledloan files. For residentialmortgage
25 loans,eachloanfile normallycontainsthe informationin suchimportantdocumentsasthe
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26 borrower'sapplicationfor the loan,creditreportson the borrower,andan appraisalof the


27 propertythat will securethe loan.
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COMPLAINT
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I 34. Collateralpools usually includethousandsof loans.Insteadof potentialinvestors

2 reviewing thousandsof loan files, the securitiesfirms that will underwrite the sale of the

certificates in a securitizationare responsiblefor gathering,verifring, and presentingto potential


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4 investorsthe information about the credit quality of the loans that will be depositedinto the trust.

) As will be alleged in detail below, the information that the Defendantspresentedto the Bank

6 about the credit quality of the loans in the collateral pools of the 80 trusts containedmany

7 statementsthat were material to the credit quality of those loans, but, on information and belief,
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8 were untrue or misleading. Moreover, on information and belief, the Defendantswere negligent

9 in making those untrue or misleading statementsto the Bank.


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l0 TOLLING OF' THE STATUTE OF' LIMITATIONS

ll 35. The Bank is a member of the proposedclassesin Luther v. Countrywide Financial

I2 Corporation, Superior Court for the Stateof California County of Los Angeles No. BC 380698,
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13 filed on November 11,2007, New Jersey CarpentersHealth Fund v. Residential Capital LLC,

t4 United StatesDistrict Court for the SouthemDistrict of New York No. 08-cv-8781,filed on

l5 September22,2008, andNew Jersey CarpentersHealth Fund v. Beqr StearnsMortgage Funding

t6 Trust 2006-AR1,United StatesDistrict Court for the SouthernDistrict of New York No. 08-cv-
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t7 08093, filed on August 20,2008, the pendencyof which actions has tolled the running of the

18 statuteof limitations on causesof action alleged in this complaint.


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t9 THE SALES OF THE CERTIFICATES

20 36. The Defendantssold to the Bank 93 certificatesin SecuritizationsNos. I through

2l 80. Details of eachtrust and eachcertificate are statedin Item 36 of SchedulesI through 80 of

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this complaint, which correspondto SecuritizationsNos. I through 80. The Bank incorporates

23 into this paragraph36, and allegesas though fully set forth in this paragraph,the contentsof Item

24 36 ofthe schedules.

25 MATERIAL UNTRUE OR MISLEADING


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STATEMENTS
26 ABOUT THE CERTIFICATES

27 37. In connectionwith their offers and salesof the certificatesto the Bank, each of the

28 eleven dealerssent numerousdocumentsto the Bank at its office in San FranciscoCounty. In


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COMPLAINT
I each case,thesedocumentsincluded a term sheet,the prospectussupplementfor the certificates

2 that was filed with the SEC, drafts of some of the statistical tables to be included in the prospectus

3 supplement,and a computer model of the financial structureof the securitization.In each of these
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4 documents,each dealer made statementsof material fact about the certificate that it offered and

5 sold to the Bank.I A true copy of the prospectussupplementfor each securitization is available

6 from the SecuritiesExchangeCommission website.2

7 38. On information and belief, many of the statementsof material fact that each dealer
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8 made in thesedocumentswere untrue or misleading. Theseuntrue or misleading statements

9 included the followins.


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l0 A. Untrue or Misleading Statementsabout the Loan-to-Value Ratios (LTVs) and
Combined Loan-to-Value Ratios (CLTVs) of the Mortgage Loans in tne Colateral
ll Pools of theseSecuritizations
I2 l. The materiality of LTVs and CLTVs
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l3 39. The loan-to-valueratio of a mortgageloan, or LTV, is the ratio of the amount of

I4 the mortgage loan to the value of the mortgagedproperty when the loan is made. For example,a

15 loan of $300,000securedby propertyvalued at $500,000has an LTV of 600/o;aloanof $450,000

t6 on the sameproperty has an LTV of 90o/o.LTV is one of the most important measuresof the risk
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t7 of a mortgage loan, and the LTVs of the mortgage loans in the collateral pool of a securitization

l8 are likewise one of the most important measuresof the risk of certificates sold in that
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19 securitization.LTV predicts the likelihood of default (the lower the LTV, the less likely that a

20 decline in the value of the property will wipe out the owner's equity, and thereby give the owner

2I an incentive to stop making mortgagepaymentsand abandonthe property). LTV also predicts the

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severity of loss in the event of default (the lower the LTV, the greaterthe "cushion," so the

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24 ' Three of the
certificatesthat the Bank purchasedwere certificates in re-securitizationsof existing
25 certificates of mortgage-backedsecurities.In connectionwith the sale of those three certificates,the
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dealerssent to the Bank a private placementmemorandumfor the re-securitizationand prospectus


26 supplementsfiled with the SEC for the underlying securitizations.Details of the re-securitizationsare
included in their respectiveschedules.
27 2
A uniform resourcelocator for eachprospectussupplementis included in Item 36 of each
schedule.
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COMPLAINT
I greaterthe likelihood that the proceedsof foreclosurewill cover the unpaid balanceof the

2 mortgage loan).

3 40. The denominatorin LTV (value of the mortgagedproperty) is determinedby


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4 either an appraisalor by the purchaseprice of the property. In a refinancing or home-equity loan,

5 there is no purchaseprice to use as the denominator.For a purchase,the agreedprice may be

6 higher than the value of the property, and an appraisalshould ensurethat the LTV is calculated

7 using the actual value as the denominator.Sometimesin a purchase,the denominatoris the lower
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8 ofthe purchaseprice or the appraisedvalue.

9 4I. Thus, an accurateappraisalis essentialto an accurateLTV. In particular, a too-


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10 high appraisalwill understate,sometimesgreatly, the risk of a loan. To return to the example

ll above, if the property whose actual value is $500,000is appraisedinsteadat $550,000,then the

t2 LTV of the $300,000loanfalls from 60% to 54.5Yo,andthe LTV of the $450,0001oanfalls from
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13 90Yoto 81.8%. In either case,the LTV basedon the incorrect appraisalunderstatesthe risk of the

t4 loan. It is also important to note that, the higher the correct LTV, the more the risk is understated

l5 by an incorrect appraisalof any given magnitude.In the example above, there is liule difference

T6 in the risk of a loan with an LTV of 60% and one with an LTV of 54.5%;both are safe loans with
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I7 large equity cushions.But there is a very large difference in the risk of a loan with an LTV of

l8 90%oand one with an LTV of 8 I .8%. In the latter case,there is an equity cushion of 18.2%;o
of the
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t9 value of the property, in the former, only llo/o,just over half as much. Thus, an appraisalthat

20 overvaluesa property by just l0% producesan overstatementof more than 80% in the

2l homeowner'sequity.
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22 42. LTV is an important measureof the risk of a mortgage loan, and the LTVs of the

23 mortgage loans in the collateral pool of a securitizationare likewise an important measureof the

24 risk of certificates sold in that securitization.LTV helps to predict both the likelihood of default

25 and the severity of loss in caseof default. A reasonableinvestor considersLTV important to the
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26 decision whether to purchasea certificate in a securitization of mortgage loans. Even small

27 differencesin the weighted averageLTV of the mortgage loans in the collateral pool of a

28 securitizationhave a significant effect on the risk of each certificate sold in that securitization,
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COMPLAINT
I and thus, are important to the decision of a reasonableinvestor whether to purchaseany such

2 certificate.
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4 43. Residentialpropertiescan securemore than one mortgage loan, a senior (or first)

5 and one or more junior mortgage loans. The combined loan-to-valueratio (CLTV) is the ratio of

6 the total outstandingprincipal balanceof all loans (mortgagesor home equity lines of credit) that

7 the property securesto the appraisedvalue of mortgagedproperty. To return to the example in


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8 paragraph39, if a property valued at $500,000 securesa first mortgage loan of $300,000and a

9 secondmortgageloan of $50,000,then it has a CLTV of 70%o.Ifthe first mortgageloan on the


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l0 samepropertyis $450,000and the secondis $50,000,then the CLTV is 100%.

11 44. Like LTV, CLTV is an important measureof the risk of a mortgage loan, and the

t2 CLTVs of the mortgage loans in the collateral pool of a securitizationare likewise an important
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l3 measureof the risk of certificates sold in that securitization.CLTV helps to predict the likelihood

t4 of default of a mortgage loan. A reasonableinvestor considersCLTV important to the decision

15 whether to purchasea certificate in a securitizationof mortgage loans. Even small differencesin

t6 the weighted averageCLTV of the mortgage loans in the collateral pool of a securitizationhave a
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t7 significant effect on the risk of each certificate sold in that securitization,and thus, are important

l8 to the decision of a reasonableinvestor whether to purchaseany such certificate.


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t9 2. Untrue or misleading statementsabout the LTVs and CLTVs of the mortgage


loans in the collateral pools of thesesecuritizations
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2t 45. In the prospectussupplementand other documentsthey sentto the Bank, the

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Defendantsmade statementsabout the LTVs and CLTVs of the mortgage loans in the collateral

23 pools of thesesecuritizations.Some of thesestatementswere in so-calledcollateral stratification

24 tables.Those tables divided the mortgageloans into severalcategoriesof LTV and CLTV and

25 presentedquantitative information about the loans in each category.All of the statementsin each
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26 prospectussupplementabout the LTVs and CLTVs of the mortgage loans in the collateral pools

27 of SecuritizationNos. I through 80 are incorporatedherein by reference.

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COMPLAINT
1 46. On information and belief, thesestatementswere materially untrue or misleading

2 because(i) the statedLTVs and CLTVs of a significant number of those mortgage loans were
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lower than the actual LTVs or CLTVs; (ii) the Defendantsomitted to statethat the appraisalsof a
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4 significant number of the propertiesthat securedthe mortgage loans in the collateral pools were

5 biasedupward, so that statedLTVs and CLTVs basedon those appraisalswere lower than the

6 true LTVs and CLTVs of those mortgageloans; or (iii) the statedCLTVs did not reflect second

7 mortgageson a significant number of the propertiesthat securedthe mortgage loans in the


w.
8 collateral pools.

9 47. Since the datesof SecuritizationsNos. I through 80, loans in the collateral pools
4c
l0 of each securitization have been foreclosedupon. In nearly all of the pools, the propertiesthat

ll securedthose foreclosedloans were sold for much less than the value ascribedto those same

I2 propertiesin the LTV and CLTV data reportedin the prospectussupplementsand other
los

13 documentsthatthe Defendantssentto the Bank.The largedifferencecannotbe explainedby the


I4 declinesin housepricesin the areasin which thosepropertieswerelocated,evenaftertaking
15 accountof the fact thatpropertiesin foreclosuresometimessell for lessthantheir fair market
T6 value.Analysisof datain an industry-standard
database
of securitizedmortgageloansshows,for
ur

l7 almostall of Securitizations
Nos. I through80,thatthe differencesbetweenthe valuesascribed
l8 thesepropertiesandthe pricesat which thepropertiesweresoldin foreclosurearesignificantly
efr

t9 greaterthanthe declinesin housepricesin the samegeographical


areasoverthe sameperiods
20 (that is, betweenthe making of eachmortgage loan and the correspondingforeclosuresale). This

2I unexplaineddifference is evidencethat the values ascribedto those properties,and to all

22 propertiesin the collateral pools, in the LTV and CLTV data reported in the prospectus
au

23 supplementsand other documentsthat the Defendantssent to the Bank were too high, the

24 resulting LTVs and CLTVs were too low, and thus that the statementsin the prospectus

25 supplementsand other documentssent to the Bank about the LTVs and CLTVs were untrue or
d.o

26 misleading. The results of this analysisfor nearly all of SecuritizationsNos. I through 80 are

27 statedin Item 47 of SchedulesI through 80 of this complaint. The Bank incorporatesinto this

28
rg

COMPLAINT
I para$aph 47, and allegesas though fully set forth in this paragraph,the contents
of Item 47 of the
2 schedules.
a
48. On information and belief, by theseuntrue and misleading statements,the
ww
J

4 Defendantsmaterially understatedthe risk of every certificate that any of them sold to the Bank.

B. Untrue or Misleading Statementsabout the Occupancy Status of the properties That


Securedthe Mortgage Loans in the Collateral Pools ofthese Securitizatidns
6
1. The materiality of occupancy status
7
w.
49. Residentialreal estateis usually divided into primary residences,secondhomes,
8
and investmentproperties.Mortgages on primary residencesare less risky than mortgageson
9
secondhomes and investmentproperties.
4c
l0
50. Occupancystatus(that is, whether the property that securesa mortgage is to be the
ll
primary residenceof the borrower, a secondhome, or an investmentproperty) is an important
t2
measureof the risk of a mortgage loan, and the percentageof loans in the collateral pool of a
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13
securitizationthat are securedby mortgageson primary residencesrather than on secondhomes
t4
or investmentproperties is an important measureof the risk of certificates sold in that
l5
securitization.Other things being equal,the higher the percentageof loans securedby primary
I6
ur

residences,the lower the risk of the certificates.A reasonableinvestor considersoccupancystatus


t7
important to the decision whether to purchasea certificate in a securitizationof mortgage loans.
18
Differences in the percentageof the mortgage loans in the collateral pool of a securitizationthat
efr

19
are securedby mortgageson primary residenceshave a significant effect on the risk of each
20
certificate sold in that securitizationand thus are important to the decision of a reasonable
2l
investor whether to purchaseany such certificate.
22
au

51. Becausethey are less risky than other mortgage loans, mortgage loans on primary
23
residencesusually have more favorable terms, including lower interest rates,than mortgage loans
24
on secondhomes and investmentproperties.Applicants for loans on secondhomes and
25
d.o

investmentpropertiestherefore have an incentive to statethat the property will be their primary


26
residenceeven when it will not.
27
28
rg

COMPLAINT
I 2. Untrue or mis-leading
statements.about the occu_pancystatusof the properties
that securedthe mortgageloansin the collateral^poolsoi th"r;;;;il.itizations
2
52. In the prospectussupplementsand other documentsthat they sentto the Bank, the
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J

4 Defendantsmade statementsabout the occupancystatusof the propertiesthat securedthe

5 mortgage loans in the collateral pool of this securitization. Someof thesestatementswere in so-

6 called collateral stratification tables.Those tables divided the mortgage loans into several

7 categoriesof occupancystatusand presentedquantitative information about the loans in each


w.
8 category.All of the statementsin the prospectussupplementand other documentsabout the

9 occupancystatusof the mortgage loans in the collateral pool of this securitization are
4c
l0 incorporatedherein by reference.

1l 53. On information and belief, thesestatementswere materially untrue or misleading

T2 because(i) the statednumber of mortgageloans that were securedby primary residenceswas


los

l3 higher than the actual number of loans in that category; (ii) the statednumber of mortgage loans

l4 that were securedby secondhomes was lower than the actual number of loans in that category;

15 (iii) the statednumber of mortgageloans that were securedby investmentpropertieswas lower

l6 than the actual number of loans in that category;or (iv) the Defendantsomitted to statethat the
ur

I7 occupancystatusof a significant number of the propertiesthat securedthe mortgage loans in the

18 collateral pool was misstatedbecauseof fraud.


efr

t9 54. On information and belief, by theseuntrue and misleading statements,the

20 Defendantsmaterially understatedthe risk of every certificate that any of them sold to the Bank.

2I C. Failure to Disclosethe Substantial Deterioration of LTV and Credit Score as


Predictors of the Performance of Mortgage Loans Securitized by the Defendant
22 Dealers
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23 55. Investors in mortgage-backedsecurities,including the Bank, rely extensively on

24 certain characteristicsof the mortgage loans in the collateral pool of a securitizationto predict the

25 performanceof those loans and thereby to determinethe risk both of those loans and of the
d.o

26 certificates sold in that securitization.Reasonableinvestorsconsider information about these

27 characteristicsimportant to the decision whether to purchasea certificate in a securitizationof

28
rg

COMPLAINT
I mortgage loans. Among the most important of thesecharacteristicsare LTV, described
above.
2 and the credit scoreof the borrower.
a
56. In the prospectussupplementsand other documentsthey sent to the Bank, the
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J

4 Defendantsmade statementsabout the LTVs and credit scoresof the mortgage loans in the

5 collateral pools of each of SecuritizationsNos. I through S0. All of those statementsare

6 incorporatedherein by reference.

7 57.
w.
During the time before each of SecuritizationsNos. I through 80, the power of

8 LTV and credit scoreto predict the performanceof otherwise similar mortgage loans deteriorated,

9 even after taking account of declinesin houseprices and other macroeconomicfactors. put
4c
l0 somewhatdifferently, loans that were very similar in thesecharacteristicsperformed worse if the

ll loans were made in2007 than if they were made in2006,worse if made in2006 than if made in

t2 2005,etc.
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l3 58. On information and belief all statementsthat the Defendantsmade about the

I4 LTVs and credit scoresof the mortgage loans in the collateral pools of thesesecuritizationswere

15 misleading becausethe Defendantsomitted to statethat, in the time before thesesecuritizations,

t6 loans that they or their affiliates securitizedwere nearly constantin reported weighted-average
ur

l7 LTV and weighted-averagecredit score,yet performed worse if the loans were made in}007 thart

18 if they were made in 2006, worse if made in2006 than if made in 2005, etc.
efr

t9 59. On information and beliel by thesemisleading statements,the Defendants

20 materially understatedthe risk of every certificate that any of them offered and sold to the Bank.

2l D. Untrue or Misle,adingStatementsabout the Underwriting Guidelines of the


Originators of the Mortgage Loans in the Collateral Pooli of theseSecuritizations
22
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1. The materiality of underwriting guidetinesand the extent of compliance with


23 them
24 60. Most or all originators of mortgageloans had written guidelines by which they

25 evaluatedapplications for loans. An originator's guidelines,and the extent to which the originator
d.o

26 complies with them, are important indicators of the risk of mortgage loans made by that

27 originator and of certificates sold in a securitizationin which mortgage loans made by that

28 originator are a substantialpart of the collateral pool. A reasonableinvestor considersthe


-16-
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COMPLAINT
I underwriting guidelines of eachoriginator of a substantialpart of the mortgage loans in the

2 collateral pool of a securitization,and the extent to which the originator complied with its

guidelines,important to the decision whether to purchasea certificate in that securitization.


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J

4 Differences in those guidelines or in the extent to which an originator complied with them have a

5 significant effect on the risk of each certificate sold in that securitizationand thus are important to

6 the decision of a reasonableinvestor whether to purchaseany such certificate.

7
w.
2. Untrue or n{sleading statementsby the Defendants about the underwriting
g_uidelinesof-the-origina_tors
of the mortgage loans in the collateral pools oi
8 thesesecuritizations and about the extent of their compliance with t'hose
guidelines
9
4c
l0 61. In the prospectussupplements,the Defendantsmade statementsabout the

l1 underwriting guidelines of the originators of the mortgage loans in the collateral pools of

12 SecuritizationsNos. 1 through 80. Those statementsare describedin Item 6l of SchedulesI


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l3 through 80 of this complaint. The Bank incorporatesinto this paragraph61, and allegesas though

t4 fully set forth in this paragraph,the contentsof Item 61 of the schedules.

15 62. On information and belief, thesestatementswere materially untrue or misleading

t6 becausethe Defendantsomitted to statethat (a) the originators were making frequent, and
ur

l7 increasingly frequent, exceptionsto those underwriting guidelines; (b) the originators were

18 making frequent, and increasingly frequent,exceptionsto those underwriting guidelines when no


efr

19 compensatingfactor was present;and (c) the originators were failing frequently, and increasingly

20 frequently, to follow quality-assurancepracticesintendedto detect and prevent fraud.

2l 63. On information and beliee by theseuntrue and misleading statements,the

22 Defendantsmaterially understatedthe risk of every certificate that any of them offered and sold to
au

23 the Bank.

24
25
d.o

26
27
28
rg

COMPLAINT
I FIRST CAUSE OF ACTION
UNTRUE OR MISLEADING STATEMENTS IN TTTNS.q.LEOF SECURITIES
2 (Cal.CorporationsCodeSg25401,25501)
a
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J
Against Defendanr In connectionwith SeCuW
4 Credit Suisse Securitizations
Nos.l@
5 lhrough 10
Deutsche SecuritizationsNos. 11 through 16, and 18
through 31
6 Bear Stearns SecuritizationsNos.32 through 35r 40, and
7 4l
w.
Greenwich Canital SecuritizationsNos.42 aid44
8 Morqan Stanlev SecuritizationsNos.45 throush 47
UBS SecuritizationsNos.48through 51, and 53
9 through 59
Banc of America SecuritizationsNos.60 throueh 70
4c
l0 Countrvwide SecuritizationsNos. 75 throueh 80
64. The Bankherebyincorporates
by reference,asthoughfully setforth, paragraphsI
1l
through63.
t2
65. In doingthe actsalleged,the Defendants
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13 namedaboveviolatedSections25401
and25501of the CaliforniaCorporationsCodein the saleto the Bank of the certificatesin the
I4
securitizations
referredto above.
t5
66. This actionis broughtwithin two yearsafterthe discoveryof the untrueand
t6
ur

misleadingstatements
in the prospectus
supplements
andotherdocumentsthatthe Defendants
t7
sentto the Bank,andwithin five yearsof the Bank'spurchaseof thesecertificates,or within any
l8
applicableperiodastolled by the pendencyof the classactionsreferredto aboveor others.
efr

t9
Despitehavingexercisedreasonable
diligence,the Bankdid not andcouldnot reasonably
have
20
discoveredearlierthe untrueandmisleadingstatements
in theprospectussupplements
andother
2l
documents.
22
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67. UnderCal.Corp.Code$$ 25401and25501,,the


Bankis entitledto recoverthe
23
considerationthat it paid for each of thesecertificates,plus interest at the legal rate from the date
24
of purchaseto the date on which it recoversthe purchaseprice, minus the amount of income it
25
d.o

received on the certificate. Pursuantto $ 25501, the Bank will tender each certificate before entry
26
ofjudgment.
27
28
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COMPLAINT
I SECONDCAUSEOF ACTION
2 UNTRUE OR MISLEADING STATEMENTS
IN REGISTRATION STATEMENTS
(Section11 of the SecuritiesAct of 1933)
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J

4 Against Defendant: In connectionwithSecifrlzatm


5 Credit Suisse Securitizations
Nos.7 throush 10
Deutsche Securitizations
Nos.18 thiouEE3l
6 Bear Stearns SecuritizationsNos. 40 anil4l
SAMI II Securitization No.40
7
w.
Greenwich Canital Securitization No. 44
Morgan Stanley SecuritizationsNos. 45 throueh 47
8 UBS SeculitizationsNos.54 throush 59
Countnwide SecuritizationsNos.76 throueh 80
9
CWALT SecuritizationsNos.7, 9, 10, l&lhroug[3l;
4l,44through 47,54through 59,76
4c
l0
through 80
11
68. The Bank hereby incorporatesby reference,as though fully set forth, paragraphs1
I2
through 67.
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13
69. In doing the acts alleged,the Defendantsnamed above violated Section 11 of the
l4
SecuritiesAct of 1933 in the saleto the Bank of the certificatesin the securitizationsreferred to
l5
above.
l6
ur

70. The cenificates in thesesecuritizationswere issuedpursuantor traceableto


t7
registration statements.Details of eachregistration statementand each certificate are statedin
l8
Item 36 ofSchedules 1 through 80.
efr

19
71. SAMI II and CWALT are depositorsof the securitizationslisted above and
20
therefore are the issuersof the certificates in those securitizations.Credit Suisse,Deutsche,Bear
2I
Stearns,Greenwich Capital, Morgan Stanley,UBS and Countrywide actedas underwriters of the
22
au

certifi cateslisted above.


23
72. This action is brought within one year after the discovery of the untrue and
24
misleading statementsin the registration statements,as amendedby the prospectussupplements,
25
d.o

and within three years of thesecertificateshaving been sold to the public, or within any
26
applicable period as tolled by the pendencyof the classactions referred to above or others.
27
28
-19-
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COMPLAINT
I Despite having exercisedreasonablediligence, the Bank did not and could not reasonably
have
2 discoveredearlier the untrue and misleading statementsin the prospectussupplements.
a
73. The prospectussupplementscontaineduntrue statementsof material fact and
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J

4 omitted to statematerial facts necessaryin order to make the statements,in the light of the

5 circumstancesunder which they were made, not misleading. Theseuntrue and misleading

6 statementsincluded all of the untrue and misleading statementsdescribedin paragraphs37

7 through 63.
w.
8 74. The Bank expresslyexcludesfrom this causeof action any allegation that could be

9 construedas alleging fraud or intentional or recklessconduct. This causeof action is basedsolelv


4c
l0 on claims of strict liability or negligenceunderthe securitiesAct of 1933.

ll 75. Basedupon the truth of the statementsmade in the prospectussupplements,the

I2 Bank purchasedthesecertificates.
los

13 76. The Bank did not know when it purchasedthesecertificatesthat the statementsin

t4 the prospectussupplementswere untrue or misleading.

15 77. The Bank has suffered a loss on eachof thesecertificates.

l6 78. The Bank is entitledto recoverdamagesas describedin l5 U.S.C. g 77k(e).


ur

t7 THIRD CAUSE OF ACTION


18 UNTRUE OR MISLEADING STATEMENTS IN THE SALE OF SECURITIES
(Section l2(a)Q) of the SecuritiesAct of 1933)
efr

19
AgainstDefendant: In connection with Securitizations :
20
Credit Suisse Securitizations
Nos.7 throueh 10
2l Deutsche Securitizations
Nos.18 throueh 31
Bear Stearns SecuritizationsNos.40 and 41
22
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SAMI II Securitization No. 40


Greenwich Capital Securitization No. 44
23
Morgan Stanley Securitizations
Nos.45throueh 47
24 UBS Securitizations
Nos.54 throueh 59
Countrvwide SecuritizationsNos. 76 throush 80
25 CWALT Securitizations
Nos.7r9,10r18throughSl,
d.o

41,44through47,54through59,76
26 throush 80

27 79. The Bankherebyincorporates


by reference,asthoughfully setforth,paragraphs1

28 through78.
-20-
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COMPLAINT
I 80. In doing the acts alleged,the Defendantsnamed above violated Section l2(a)(2)

2 the SecuritiesAct of 1933in the saleto the Bankof the certificatesin the securitizations
referred
to above.
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4 81. This action is brought within one year after the discovery of the untrue and

5 misleading statementsin the prospectussupplements,and within three years of thesecertificates

6 having been sold to the public, or within any applicableperiod as tolled by the pendencyof the

7 class actions referred to above or others.Despite having exercisedreasonablediligence, the Bank


w.
8 did not and could not reasonablyhave discoveredearlier the untrue and misleading statementsin

9 the prospectussupplements.
4c
l0 82. SAMI II and CWALT are depositorsof the securitizationslisted aboveand

l1 therefore are the issuersof the certificatesin those securitizations.In connectionwith the offer

I2 and sale of thesecertificatesto the Bank, the issuersalso made all of the statementsof material
los

13 fact about thesecertificatesthat were in the prospectussupplementand other documentsthat the

t4 dealerssent to the Bank.

15 83. The Bank expresslyexcludesfrom this causeof action any allegation that could be

l6 construedas alleging fraud or intentional or recklessconduct. This causeof action is basedsolelv


ur

t7 on claims of strict liability or negligenceunderthe securitiesAct of 1933.

l8 84. The Defendantsnamed above, for their own financial gain, solicited the Bank to
efr

t9 purchasethesecertificates,and sold the certificatesto the Bank, by meansof the prospectus

20 supplements.

2l 85. Basedupon the truth of the statementsmade in the prospectussupplements,the

22 Bank purchasedthesecertificates.
au

23 86. The prospectussupplementscontaineduntrue statementsof material fact and

24 omitted to statematerial facts necessaryin order to make the statements,in the light of the

25 circumstancesunder which they were made,not misleading.


d.o

26 87. The Bank did not know when it purchasedthesecertificatesthat the statementsin

27 the prospectussupplementswere untrue or misleading.

28 88. The Bank has suffered a loss on eachof thesecertificates.


rg

COMPLAINT
I 89. The Bank is entitled to recover the considerationthat it paid for each of these

2 certificates,plus interest at the legal rate from the date of purchaseto the date on which it
a
recoversthe purchaseprice, minus the amount of income it has received on each certificate. The
ww
4 Bank will tender each certificate before entry ofjudgment.

) FOURTH CAUSE OF ACTION


LIABILITY OF CONTROLLING PERSON
6 (Section15 of the SecuritiesAct of 1933)
7
w.
Against Defendant: In connectionwith SeciW
8 'l'he
Bear Stearns Comnanies.Inc.. Securitization No. 40
CountrywideFinancial Securitizations
Nos.7r9,l0r lS througE31,
9 Corporation 41,44through47,54through 59,76
through 80
4c
10
11 90. The Bankherebyincorporates
by reference,asthoughfully setforth, paragraphs1
t2 through89.
los

13 91. The Defendants


namedaboveareliablebecause,
in doingthe actsalleged,persons
I4 they controlledviolatedSectionsI I and l2(a)(2) of the SecuritiesAct of 1933in the saleto the
l5 Bankof the certificatesin the securitizations
referredto above.
t6 92. The BearStearnsCompanies,
Inc. by or throughstockownership,agency,or
ur

t7 otherwise,controlledSAMI II within themeaningof Sectionl5 of the SecuritiesAct of 1933.


18 93. CountrywideFinancialCorporationby or throughstockownership,agency,or
efr

l9 otherwise,controlledCWALT within the meaningof SectionI 5 of the SecuritiesAct of I 933.


20 94. In doingthe actsalleged,eachcontrolledpersonnamedin paragraphs
92 through
2l 93 is liableunderSections11and l2(a)(2)of the Securities
Act of 1933for thereasons
allegedin
22
au

paragraphsI through89.
23 95. EachDefendantnamedaboveis thereforejointly andseverallyliablewith andto
24 the sameextentasthe personit controlled.
25
d.o

26
27
28
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COMPLAINT
1 FIFTH CAUSE OF ACTION
NEGLIGENT MISREPRESENTATION
2
(cat. civil code gS1572et seq.and 1709et seq.,andcommon Law)
a
ww
J

Against Defendant: In connection with Securitizationi :


4
Credit Suisse SecuritizationsNffi
) CSFB Mortsase Securities SecuritizationsNos.f thiouEf,3.s. andT
6 Deutsche SecufitizationsNos.1f t[roush 3l
DeutscheAlt-A SecuritizationsNos. 12 throueh 16
7 Bear Stearns SecuritizationsNos.32 throueh 41
w.
SAMI II SecuritizationsNos. 32, 33, 35, 37, 39, and
8 40
GreenwiahCapital $gcuritizationsNos.42 th:ioush44
9 Greenwich Capital Acceptance SecuritizationNo. 42
Morsan Stanlev SecuritizationsNos.45throueh 47
4c
10 UBS Securitizations Nos. 48 throueh 59
MAST $ecuritizationsNos.48throueh 53
11 Banc of America SecuritizationsNos.60 throush 74
Banc of AmericaFunding SecuritizationsNos.60 through 63, 68,7I,
t2 and 73
lfanc of America Mortgage Securities SecuritizationsNos. 64 through 67169170,
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l3 and72
Countrvwide SecuritizationsNos. 75 throueh 80
t4 CWALT SecuritizationsNos. 7, 9, 10, l7 through
31r41,43 through 47r54 through 59,14,
l5 and 76 throueh 80

T6 96. The Bank hereby incorporatesby reference,as though fully set forth, paragraphsI
ur

t7 through 95.

l8 97. As alleged above,the Defendantsnamed above made untrue or misleading


efr

I9 representationsregarding the LTVs and CLTVs of the mortgage loans in the collateral pools of

20 thesesecuritizations,the occupancystatusof propertiesthat securedthe mortgage loans in these

2l securitizations,underwriting guidelines of the originators, and related matters.

22 98. In making the representationsreferred to above, the Defendantsintendedto induce


au

23 the Bank to rely on those representationsin making its decision to purchasethesecertificatesin

24 thesesecuritizations.The Defendantsexpectedthat the Bank would rely on those representations

25 in deciding whether to purchasethesecertificates.


d.o

26 99. When the Defendantsmade theserepresentations,they had no reasonableground

27 for believing them to be true. Upon information and belief, the Defendantshad accessto the files

28 on the mortgage loans in the collateral pools for thesesecuritizations,and, had the Defendants
rg

COMPLAINT
I inspectedthose files, they would have learnedthat the information they gave the Bank
contained
2 untrue or misleading statements.In addition, upon information and beliel the Defendantshired
a
one or more "due'diligence contractors" to ascertainwhether the mortgage loans in the collateral
ww
J

4 pools complied with the representationsand warrantiesmade about those loans, and these

5 contractorsreportedto the Defendantsthat amaterial number of the loans in the collateral pools

6 were materially different from the descriptionsof those loans in the prospectussupplements.

7 Thus, on information and belief, the Defendantshad accessto information that either did make
w.
8 the Defendantsaware, or would or could have made them aware had they heededthat

9 information, that the representationsthey made to the Bank containedmaterially untrue or


4c
l0 misleading statementsabout the mortgage loans in the collateral pools.

l1 100. The Bank reasonablyandjustifiably relied on the representationsdescribedabove

T2 in analyzingand deciding to purchasethesecertificates.Had the Defendantsnot madethesefalse


los

13 and misleading representations,the Bank would not have purchasedthesecertificates.

t4 l0l. When it purchasedthesecertificates,the Bank did not know about the untrue and

15 misleading statementsalleged herein.

l6 102. As a direct and proximate result of the negligent misrepresentationsby the


ur

l7 Defendants,the Bank was damagedin an amount to be proved at trial.

l8 SIXTH CAUSEOF ACTION


efr

19
RESCISSIONOF CONTRACT
20
(CaliforniaCivil CodeSS1689and 1710,and CommonLaw)
2l
Against Defendant: In connectionwith Securitizations:
22
au

Credit Suisse Securitizations


Nos.I throueh 10
23 Deutsche Securitizations
Nos.11 throush 31
Bear Stearns Securitizations Nos. 32 throush 4l
24 Greenwich Capital Securitizations Nos. 42 throueh 44
25 Morgan Stanley Securitizations
Nos.45 throueh 47
d.o

UBS SecuritZations Nos.4E throueh 59


26 Banc of America SecuritizationsNos. 60 throush 74
Countnrwide Securitizations Nos. 75 throueh 80
27
28
-24-
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COMPLAINT
I 103' The Bank hereby incorporatesby reference,as though fully set forth, paragraphsI

2 through 102.

104. The Bank purchasedeach certificate pursuantto a contract in writing betweenthe


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J

4 Bank and the dealer from which it purchasedthat certificate. Each contract statedthe

) considerationthat the Bank paid eachdealer for each certificate.

6 105' In making each contract to purchasethe certificates,the Bank relied on the truth of

7 the statementsthat the Defendantsnamed above made in the prospectussupplements.Because


w.
8 those statementswere untrue or misleading, the Bank was mistaken about its basic assumptions

9 underlying its purchaseof eachcertificate, and this mistake had a material adverseeffect on the
4c
l0 agreed-uponexchangerepresentedby the Bank's purchaseofeach certificate. Becausethe

11 Defendantsnamed above were responsibleto provide accurateinformation in the prospectus

t2 supplements,the Bank did not assume,nor does it bear,the risk of the fundamentalmistake
los

l3 underlying its decision to purchasethesecertificates.

I4 106. The Defendantsnamed above obtainedthe consentof the Bank to the contractsto

l5 purchasethe certificates by meansof their assertion,as facts, of that which was not true, when

I6 those Defendantshad no reasonableground for believing those assertionsto be true.


ur

t7 107. Pursuantto Cal. Civil Code. $ 1639 et seq.,the Bank is entitled to rescind, and

l8 doeshereby demandthe rescissionof, eachcontract for the sale and purchaseof thesecertificates.
efr

19 The Bank offers to restoreall benefits that it has receivedunder those contractsand is entitled to

20 recover all considerationthat it paid under them.

2l PRAYER FOR RELIEF

22
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WHEREFORE, the Bank respectfully demandsjudgment as follows:

23 On the first causeof action, the considerationthat the Bank paid for each certificate with

24 interestthereon,less the amount of any income that the Bank has received thereon,upon the

25 Bank's tender of each certificate;


d.o

26 On the secondcauseof action, damagesin an amount to be determinedat trial;

27
28
-25-
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COMPLAINT
I On the third causeof action, the considerationthat the Bank paid for each certificate
with
2 interest thereon,less the amount of any income that the Bank has receivedthereon,upon
the
a
Bank's tender of each certificate;
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J

4 On the fourth causeof action, the considerationthat the Bank paid for each certificate

5 with interestthereon,less the amount of any income that the Bank has received thereon,upon the

6 Bank's tender of each certificate;

7 On the fifth causeof action, damagesin an amount to be determined attial;


w.
8 On the sixth causeof action, the considerationthat the Bank paid for each certificate with

9 interestthereon,less the amount of any income that the Bank has received thereon,upon the
4c
l0 Bank's tender of each certificate;

11 All togetherwith the costs of this action, the reasonablefees of the Bank's attomevs in

t2 this action, and such other and further relief as the court may deemjust.
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l3 JURY DEMAND
I4 THE BANK DEMANDS TRIAL BY ruRY OF ALL ISSUESSO TRIABLE.
15 Ma rch1 5 ,2 0 1 0 GOODIN,MACBRIDE, SQUERI,
DAY & LAMPREY. LLP
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GRAIS & H LLP


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By
efr

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Attomeys for Plaintiff
20 FederalHome Loan Bank of San Francisco
2l 3428/0OllXl17M3.vl

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au

23
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d.o

26
27
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COMPLAINT

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