THE NEED TO MISLEAD: How to Use Expert Declaration: MBIA Sues Credit Suisse with Details on Securitization

MBIA V CSFB-DLJ

Here you have a lawsuit that corroborates everything we have been telling you on Livinglies PLUS an example of how to use the third party report of an expert in pleadings. The content of the lawsuit is a clear explanation of the securitization process — the catch is that these are not just allegations — they are predicated on the expert report or declaration of people who are knowledgeable in securitization. The use of the expert findings takes the argument from theoretical to factual.

Your hidden agenda is to lead the Judge into the unavoidable conclusion that these securitized loans were based upon lies to borrowers, lies to investors, lies to insurers, lies to rating agencies and anyone else they needed to mislead in order to get these so-called mortgage-backed securities sold and insured.

The differences between this lawsuit and others that have been filed are many. MBIA is suing here because they were defrauded into insuring securitized mortgage loans that did not meet the criteria and representations concerning underwriting standards. The accusation is essentially that Credit Suisse, through its multiple subsidiaries and affiliates, lied to MBIA about the risk of defaults and therefore the risk of loss. And they are saying that the DLJ obligation to buy back the loans was breached.

Most importantly, the lawsuit describes the process of securitization with multiple pools created for multiple sales, each with its own set of fees and profits. While this lawsuit is yet another example of why borrowers and investors and insurers could join forces, it serves as an excellent resource for the content of an expert declaration, the allegations of a lawsuit alleging fraudulent underwriting representations, and the damage caused by reasonable reliance on the representations of multiple parties in multiple layers each designed to create “plausible deniability.”

My suggestion is that the description of this process be included in the expert report, that the allegations of the complaint be made simple, and that the tactical approach should be to allow the Judge to come to his/her own conclusion as to what happened. The important point here is that you make your appearance in court raising questions of fact that entitle you to discovery and to force answers to basic questions like who is the lender NOW and how much has been paid by whom on the obligation.

Tags: Credit Suisse, DLJ, FORMS, fraud, insurance, MBIA, plausible deniability, pools, real lender
Posted in bubble, Corruption, Eviction, securities fraud |