Claiming that RBS Securities Inc. made false representations atthe time that more than a dozen residential mortgage-backedsecurities were purchased by CUNA Mutual Insurance Society, CUMISInsurance Society and MEMBERS Life Insurance Co., the companieshave filed a lawsuit against the bank to recover $72 million inlosses.

According to the CUNA Mutual complaint, between 2004 and 2007,the company said RBS “induced” it to buy 15 certificates in 10separate RMBS offerings by making representations about the creditquality of the pools of mortgage loans collateralizing thoseRMBS.

RBS made these representations through its offering documents,which consisted of registration statements, prospectuses, termsheets, free writing prospectuses and prospectus supplements,CUNA Mutual said.

The documents supposedly contained various statisticalrepresentations about the loan pools backing the RMBS, includingtheir loan-to-value ratios, combined loan-to-value ratios andowner-occupancy rates.

“For investors like CUNA Mutual, these quantitativerepresentations were material because they provided an indicationof anticipated default rates in the loan pools and anticipatedforeclosure recoveries on the defaulted loans,” the complaintread.

CUNA Mutual said it relied on RBS's quantitative representationsin deciding to purchase 15 certificates in the10 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.

“This action is about righting a wrong and is being taken in thebest interests of CUNA Mutual Group and its policyholders” wroteJim Buchheim, CUNA Mutual vice president of corporatecommunications, to Credit Union Times in a statement. “Thecomplaint we filed fully explains why we took this action. However,because this issue is in litigation, we will not comment further onthe lawsuit.”