2012-04-13wsj.com

HSH Nordbank AG has sued two units of Barclays over the purchase of $46 million in residential mortgage-backed securities, contending in part that Barclays misrepresented the quality of loans underlying the securities.

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"For each of the securitizations, the offering documents materially overstated the percentage of loans that were owner-occupied, and thus materially understated the certificates' degree of risk," HSH Nordbank said in the lawsuit.

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In its complaint Monday, HSH Nordbank also alleged that all of the mortgages weren't assigned to trusts backing the securities as promised. By not doing so, it hinders the ability of the trusts to foreclose on the mortgaged properties, according to the lawsuit.


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