Tag Archives: MBS

Pimco sues Wells Fargo, claims MBS trustee ‘looted’ trusts to pay legal fees

(Reuters) – Several Pimco investment funds are accusing the mortgage-backed securities trustee Wells Fargo of misusing noteholder money to pay its own legal expenses.

In a newly filed complaint in Manhattan State Supreme Court, the Pimco funds are asking for a declaratory judgment that Wells Fargo is not entitled to use MBS trust money to fund its defense against noteholder claims that the bank breached its duties as an MBS trustee. Pimco’s lawyers at Bernstein Litowitz Berger & Grossmann allege that Wells Fargo has improperly reserved about $95 million across 20 MBS trusts.

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RBS to pay $1.1 billion to resolve some of its U.S. mortgage claims

Royal Bank of Scotland Group Plc will pay $1.1 billion (£847.07 million) to resolve claims that it sold toxic mortgage-backed securities to credit unions that later failed, the U.S. National Credit Union Administration (NCUA) said.

The resolution comes as RBS prepares to settle a number of U.S. cases where it is accused of mis-selling mortgage-backed bonds and brings the U.S. regulator’s recoveries against various banks to $4.3 billion over their sales of such securities before the 2008 financial crisis.

NCUA Board Chairman Rick Metsger said the regulator plans to continue “to pursue recoveries against financial firms that we maintain contributed to the corporate crisis.”

This case is included in the around $5 billion RBS has set aside to settle historic misconduct charges, but some analysts estimate the total claims will be much larger.

The settlement on Tuesday resolves lawsuits filed in federal courts in California and Kansas in the NCUA’s role as the liquidating agent for Western Corporate Federal Credit Union and U.S. Central Federal Credit Union.

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Deutsche Bank to fight $14 billion demand from U.S. authorities

Deutsche Bank  (>> Deutsche Bank AG) said it would fight a $14 billion (11 billion pound) demand from the U.S. Department of Justice to settle claims it missold mortgage-backed securities, a shock bill that raises questions about the future of Germany’s largest lender.

Deutsche Bank  (>> Deutsche Bank AG) said it would fight a $14 billion (11 billion pound) demand from the U.S. Department of Justice to settle claims it missold mortgage-backed securities, a shock bill that raises questions about the future of Germany’s largest lender.

The claim against Deutsche, which is likely to trigger several months of talks, far exceeds the bank’s expectations that the DoJ would be looking for a figure of only up to 3 billion euros ($3.4 billion).

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Bank of America Settles Mortgage-Back Securities Case with Public Fund

The bank has agreed to pay $335 million to settle a lawsuit brought by the Pennsylvania Public School Employees’ Retirement System.

The U.S. District Court for the Southern District of New York has preliminarily approved a settlement of a lawsuit brought by Pennsylvania Public School Employees’ Retirement System against Bank of America over the bank’s mortgage-back securities program.

The lawsuit, originally filed in 2011, claims the defendant violated federal securities law by allegedly misrepresenting and concealing the magnitude of the bank’s potential exposure to demands to repurchase mortgage-backed securities that had been sold by Bank of America and Countrywide Financial Corporation, and about alleged risks to the Bank arising from its use of and reliance on a national database that tracks changes in mortgage servicing rights and beneficial ownership interest in loans secured by residential real estate. The lawsuit claims the misrepresentations caused Bank of America stock to trade at artificially inflated prices.

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The Indisputable Role of Credit Ratings Agencies in the 2008 Collapse, and Why Nothing Has Changed

A scene from the Oscar-nominated movie The Big Short depicts the important role of credit ratings agencies during the Great Recession. It shows Melissa Leo as an employee of Standard & Poor’s (one of the big three credit ratings agencies) explaining to Steve Carell (who plays a hedge fund manager) why S&P continues to give AAA ratings to mortgage-backed securities (consisting of junk loans). The answer given by her is: “They’ll just go to Moody’s.”

The role of the credit ratings agencies during the financial crisis remains highly criticized and mostly unaccountable. The agencies have been blamed for exaggerated ratings of risky mortgage-backed securities, giving investors false confidence that they were safe for investing. While criticizing the ratings by credit ratings agencies in an op-ed for The New York Times, columnist Paul Krugman wrote, “The skewed assessments, in turn, helped the financial system take on far more risk than it could safely handle.” In 2011, the Financial Crisis Inquiry Commission found that these ratings agencies “were key enablers of the financial meltdown.”

Reforms for credit ratings agencies have been given importance in the 2016 presidential primary debates. In his financial reform proposal, Bernie Sanders aims to change the business model used by the credit ratings agencies to a nonprofit model, keeping it independent of Wall Street. On the other hand, in her vision of financial reforms, Hillary Clinton keeps the credit ratings agencies untouched.

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JPMorgan Chase Prepares $1.9 Billion MBS Deal

JPMorgan Chase & Co., is preparing to sell a group of mortgage-backed securities worth nearly $2 billion, the company confirmed toMReport Wednesday morning.

This credit risk transfer is expected to reduce the risk borne by U.S. taxpayers and bring more private capital back into the mortgage market. In addition, this transaction will help restore private-sector securitization, a necessary component of the broader recovery of the housing system in the U.S.

According to Wall Street Journal writer, Emily Glazer, the bank is expected to price the residential mortgage-backed  securities deal over the next two weeks. JPMorgan Chase would hold 90 percent of the deal by holding the safest parts and selling off the riskier pieces to investors, she wrote.

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JPMorgan Chase agrees to $905,000 settlement with Indiana officials

JPMorgan Chase has agreed to pay $905,000 in a settlement with Indiana officials over losses from mortgage-backed securities purchased in 2006, just before the controversial investment vehicle contributed to a national financial meltdown.

Indiana Secretary of State Connie Lawson said Tuesday that the settlement was the result of an investigation into the sale of residential-mortgage backed securities in Indiana. The Indiana State Teachers’ Retirement Fund purchased such investments issued by the New York-based bank in 2006.

The Secretary of State’s Office has alleged that JPMorgan Chase did not disclose critical information about the quality of the collateral loans underpinning the securities to investors who purchased them.

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Morgan Stanley to pay $63 million U.S. mortgage bond settlement: FDIC

Morgan Stanley has agreed to pay nearly $63 million to resolve claims over the sale of toxic mortgage-backed securities to three banks that later failed, the Federal Deposit Insurance Corp said on Tuesday.

The settlement resolves lawsuits the U.S. regulator filed as receiver for the three failed banks against Morgan Stanley and other defendants over what the FDIC said were misrepresentations in the offering documents for the mortgage-backed securities.

Morgan Stanley declined comment on the settlement. It was the latest step by the Wall Street bank to resolve U.S. government claims stemming from the sale of mortgage bonds before the financial crisis.

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Bank of America Has Paid Nearly Half of MBS Settlement

Bank of America has paid more than $2.1 billion in consumer relief in the second quarter, making strides in paying the mortgage crisis-related penalties imposed by the Justice Department, an independent monitor announced Tuesday.

Eric Green, the settlement monitor, has conditionally approved a cumulative credit to the bank worth $3.3 billion, which is about half of what Bank of America owes in consumer relief penalties tied to the August 2014 settlement over the sale of troubled mortgage-backed securities.

The $1.6 trillion-asset company had agreed to pay a total of $16.65 billion in consumer relief and fines — the largest civil settlement between the government and a U.S. company at the time.

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Bank of America must face Ambac lawsuit over mortgage securities


A lawsuit against Bank of America Corp alleging the bank’s Countrywide mortgage unit fraudulently induced an insurer to cover more than $25 billion of mortgage-backed securities can proceed, a New York judge has ruled.

In a decision made public Tuesday, Manhattan Supreme Court Justice Eileen Bransten denied a summary judgment motion seeking to dismiss the case by Countrywide and Bank of America against plaintiff Ambac Assurance Corp.

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