Pimco sues Citi over mortgage securities

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Pacific Investment Management Co. sued Citigroup over the bank’s role as trustee for $13.8bn of mortgage-backed securities made toxic when the housing bubble burst, leading to "substantial damages."

Bloomberg News reports that the lawsuit by more than two dozen Pimco trusts was filed Tuesday in New York state court in Manhattan. According to the complaint, subsidiary Citibank NA knew the pools of loans backing the trusts from 2004 to 2007 were filled with defective mortgages.

Prudential Retirement Insurance & Annuity Co. and Aegon NV, the Dutch owner of U.S. insurer Transamerica, joined the Pimco trusts in the complaint. The claims include breach of contract and breach of fiduciary duty.

"Citibank knew that the pools of loans backing the trusts were filled with defective mortgage loans that materially breached seller representations and warranties," the trusts said in the complaint. 

To access the complete Bloomberg News article hit the link below:

Pimco Sues Citibank Over `Defective' Mortgage Securities

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