NAB Sued Over HomeSide's MSR Valuations.(National Australia Bank)

National Australia Bank here, the former owner of mega-servicer HomeSide Lending, Jacksonville, Fla., has been slapped with a civil class-action lawsuit, accusing it of violating securities laws in regard to disclosures on the value of HomeSide's residential receivables.

In the summer and fall of 2001, NAB wrote down its investment in HomeSide by $2.2 billion.

Last year, NAB sold HomeSide's production network to Washington Mutual, Seattle, for a mere $25 million. In a separate deal that came later, WaMu bought $131 billion of HomeSide's servicing portfolio.

Midfirst of Oklahoma reportedly bought about $15 billion in servicing from HomeSide - mostly government- backed product. (This sale has never been confirmed.)

At one point HomeSide had about $187 billion in servicing rights on its books.

The company was hammered by refinancings and faster-than-expected prepayment speeds on its receivables.

In January 2002, NAB conducted an independent review of the HomeSide writedowns, concluding that no one at the bank parent was responsible for the debacle.