Justice Charles Ramos
This action concerned two financial guaranty policies CIFG Assurance North American Inc. issued in which it guaranteed payments to investors on certain tranches of securities issued in two re-resecuritization transactions (re-REMICS). Re-REMICs are previously securitized residential mortgage backed securities transactions (RMBS) that are repackaged and resold, and are typically comprised of unsold RMBS. CIFG alleged it conducted initial due diligence including use of stress tests and other modeling techniques to assess the risk profile and credit-worthiness of Certificates. CIFG did not have access to underlying loan files and relied on defendants to provide the information required to conduct CIFG’s initial due diligence. CIFG alleged defendants made material misrepresentations and omissions in the offering materials regarding compliance with underwriting standards and practices, due diligence results, owner-occupancy statistics, appraisal procedures, LTV ratios, loan servicing, transfers of title and credit ratings. The court held the complaint failed to allege defendants made false statements with the requisite particularity required by CPLR 3016(b) and failed to plead that the defendants acted with scienter.
