CUNA Mutual Group this week asked the U.S. Court for the WesternDistrict of Wisconsin to issue an order that would require RBSSecurities Inc. to buy back $72 million in failed residentialmortgage-backed securities.

The securities were sold to CUMIS Insurance Society and MEMBERSLife Insurance Co., both subsidiaries of CUNA Mutual in Madison, Wis.

Between 2004 and 2007, CUNA Mutual said RBS “induced” it to buy15 certificates in 10 separate RMBS offerings by makingrepresentations about the credit quality of the pools of mortgageloans collateralizing those RMBS, according to the CUNA Mutual'scomplaint.

CUNA Mutual said it relied on RBS's quantitative representationsin deciding to purchase 15 certificates in the 10 separate RMBSofferings. After CUNA Mutual's purchases, all 10 of the securitiesperformed poorly and the 15 certificates have since lost much oftheir value, according to the complaint.

CUNA Mutual said it is seeking to recover $72 million, theamount it would take for RBS to buy back the failed RMBS.

Before it filed the lawsuit, CUNA Mutual said it commissioned aforensic investigation of the loan pools collateralizing the 10RMBS to test the accuracy of RBS's quantitative representations. Itsampled 17,949 loans from each transaction and conducted aretroactive appraisal using valuation models and historical data totest RBS's representations about LTV and CLTV ratios. CUNA Mutualalso analyzed public records to test RBS's representations aboutowner occupancy rates.

CUNA Mutual said its investigation revealed that RBS'squantitative representations in the offering documents of the 10RMBS were false at the time they were made. Specifically, RBS“dramatically understated the LTV or CLTV ratios of the loan poolsunderlying the 10 RMBS.”

In its motion filed on Thursday, CUNA Mutual said CUMIS invokeda right of rescission that would require RBS Securities buy backthe RMBS.

Phil Tschudy, CUNA Mutual media relations manager, confirmedwith Credit Union Times on Friday the company did indeedfile the motion but said the company did not have any additionalcomment.