CORRECTED-Credit Suisse faces narrowed U.S. credit union regulator lawsuit
(Corrects paragraph 2 to describe remaining claims as "close to" and not "more than" half its case, corrects paragraph 10 figure to "$311.6 million" and not $417.6 million, corrects paragraph 11 figure to "$403.9 million" and not $297.9 million)
* Close to half of case over $715 mln securities survives
* NCUA evaluates options on dismissed claims
By Jonathan Stempel and Aruna Viswanatha
April 10 (Reuters) - A federal judge has narrowed a U.S. credit union regulator's lawsuit against Credit Suisse Group AG over the sale of $715.5 million of mortgage-backed securities to failed corporate credit unions.
Monday's decision by U.S. District Judge John Lungstrum in Kansas City, Kansas, nonetheless allows the National Credit Union Administration to pursue close to half its case against the Swiss bank.
It suggests that the regulator may be able to recover considerably more than the $335.8 million it has already obtained in settlements with four major banks.
The NCUA is pursuing 10 lawsuits on behalf of five credit unions it seized in 2009 and 2010 over losses they suffered on $14.1 billion of mortgage-backed securities amid a crumbling housing market.
Half of the securities were sold by JPMorgan Chase & Co , or Bear Stearns Cos or Washington Mutual Inc, both of which JPMorgan bought in 2008.
Wholesale credit unions suffered more pain than retail counterparts because they had more leeway on how to invest.
The Credit Suisse case relates to the sale between 2005 and 2007 of 20 residential mortgage-backed securities to three credit unions for which the NCUA board is now a conservator.
According to the regulator, Credit Suisse's offering documents for the securities misleadingly represented that the underlying loans were underwritten properly, and understated or misstated the risks of those loans.
Credit Suisse countered that any faults were minor, and that the credit unions were on notice that some loans could be risky.
But Lungstrum said the NCUA could pursue federal claims over eight certificates for which the credit unions had spent $311.6 million, saying the regulator had "stated plausible claims, with sufficient specificity," that securities laws were violated.
The judge nonetheless dismissed federal claims relating to the other 12 certificates, which cost $403.9 million, and California and Kansas state law claims on all 20 certificates.
He said this was because the NCUA missed deadlines to bring some claims within one or two years of discovering problems, or three or five years of the alleged sales or violations.
Nonetheless, he said some of the claims could be saved under a federal "extender" statute that gives government entities acting as conservators or liquidating agents more time to sue.
"We respectfully disagree with portions of the decision finding some of our claims untimely, and we are evaluating our options with regard to those portions," NCUA spokesman John Fairbanks said.
Credit Suisse spokesman Drew Benson declined to comment.
APRIL 29 HEARING
Eight of the 10 lawsuits are being handled in Kansas City, near the former home of failed U.S. Central Federal Credit Union, which bought some of the securities at issue.
An April 29 hearing has been scheduled for the eight cases, including three against JPMorgan and one each against Credit Suisse, Barclays Plc , Royal Bank of Scotland Group Plc , UBS AG and Wells Fargo & Co.
A case against Goldman Sachs Group Inc and another case against RBS are being handled in California, the NCUA said.
Banks that have settled with the NCUA are Bank of America Corp, Citigroup Inc, Deutsche Bank AG and HSBC Holdings Plc . Bank of America's $165 million settlement, announced on April 2, is the largest.
The case is National Credit Union Administration Board v. Credit Suisse Securities (USA) LLC et al, U.S. District Court, District of Kansas, No. 12-02648. (Reporting by Jonathan Stempel in New York and Aruna Viswanatha in Washington, D.C.; Editing by Jan Paschal)