SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF WESTCHESTER
MBIA INSURANCE CORPORATION,
Plaintiff,
-against-
J.P. MORGAN SECURITIES LLC (f/k/a
BEAR, STEARNS & CO. INC.),
Defendant.
1. MBIA seeks to recover damages it suffered as a result of the fraudulent acts and
omissions by Defendant’s predecessor-in-interest, Bear, Stearns & Co. Inc. (“Bear Stearns”) to
induce MBIA to issue a financial-guaranty-insurance policy in connection with the GMAC
Mortgage Corporation Home Equity Loan Trust 2006-HE4 (the “2006-HE4 Securitization”).
Bear Stearns was the lead securities underwriter on the 2006-HE4 Securitization.
2. To make the securities issued by the 2006-HE4 Securitization more marketable,
Bear Stearns sought a financial guaranty insurer to guarantee the trust’s payments to investors in
the event that cash flows to the trust were impaired by the failure of mortgage borrowers to make
payments of principal and interest. To secure MBIA’s agreement to provide this insurance, the
sponsor of the securitization, GMAC Mortgage Corporation (“GMAC Mortgage”), made a set of
comprehensive representations and warranties to MBIA about the characteristics of the
securitized loans and the underwriting standards under which they were originated. Among
other things, GMAC Mortgage represented and warranted to MBIA that the securitized loans
were underwritten generally in accordance with GMAC Mortgage’s underwriting standards and
complied in all material respects with applicable local, state, and federal laws.
[…]
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