FGIC Sues Ally Financial

Bond isuing giant, FGIC, has sued Ally Financial units for fraud and breach of contract. This information has been sent to the press today from The Wallstreet Journal. The first lawsuit involves Ally financial's GMAC unit and what FGIC is calling misleading business practices involving the quality of thousands of home loans during the housing boom. FGIC is stating that GMAC represented their home loans at a lower risk rate than known to be true to make sure FGIC would insure the $1.2 billion transaction that took place in 2006. Additionally, FGIC is suing Ally Financial's Residential Funding unit regarding Underwriting misrepresentation, among other things, of two notes it insured totalling $1,431.3 million as well as 1.2 billion mortgage-backed securities transaction in 2005.