Sunday, 3 May 2015
Last updated 1 day ago
Jan 26 2009 | 2:07am ET
Mortgage-backed securities hedge fund shop Ellington Management Group is crying foul over subprime mortgage loans it says it lost some $354 million on.
The Old Greenwich, Conn.-based firm has sued Ameriquest Mortgage Corp. and other divisions of its parent, ACC Capital Holdings, accusing them of lying about the risks inherent in the securities. According to a lawsuit filed earlier this month in New York federal court, the loans backing the securities bought by the hedge fund failed to meet Ameriquest’s own guidelines. Ellington alleges that the firm failed to verify borrowers’ employment, ignored late payments and misstated whether the borrowers actually lived on their properties.
Ellington characterized its investment in the bonds as “largely lost.”
Ameriquests’ “liability arises not from increasing default rates associated with a general economic downturn, but from their fraud—from lying to Ellington about the riskiness of the loans.”
The suit also names several former ACC entities bought by Citigroup in 2007. Citi itself is not named in the lawsuit, and a spokesman made clear to Bloomberg that it is not the successor to Ameriquest or Argent Mortgage, ACC’s former wholesale lending business.
Ameriquest, once one of the country’s largest subprime mortgage lenders, closed its doors in 2007. In January of that year, JPMorgan Securities—acting on Ameriquest’s behalf—reportedly approached Ellington about buying Ameriquest, although discussions apparently did not go far.
Mar 20 2015 | 12:45pm ET
StreetWise Partners, a non-profit organization that works with low-income individuals to help them overcome employment barriers, raised over $275,000 at the 2015 Raising the Ante Charity Poker Tournament and Casino Event last Wednesday evening at Capitale. Here are some photos from the event. Read more…