The Department of Justice appears ready to issue a lawsuit against Moody’s Investor Services due to the ratings Moody’s issued for residential mortgage-backed securities and collateralized debt obligations before the financial crisis, reports HousingWire staffer Ben Lane.

The news was revealed by Moody’s in its third-quarter earnings release. “In a letter dated September 29, 2016, the DOJ stated that it is preparing a civil complaint to be filed against Moody’s and MIS in the US District Court for the District of New Jersey alleging certain violations of the Financial Institutions Reform, Recovery, and Enforcement Act in connection with the ratings MIS assigned to residential mortgage-backed securities and collateralized debt obligations in the period leading up to the 2008 financial crisis,” Moody’s said in its earnings release.

It was last year that Standard & Poor’s reached a settlement with the DOJ and nearly 20 states, requiring S&P to pay $1.375 billion over claims that it knowingly misled mortgage bond investors by issuing trumped-up ratings for pre-crisis residential mortgage-backed securities.

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