SF Home Loan Bank Takes $459M To Settle MBS Claims

Law360, Los Angeles (January 16, 2015, 7:38 PM ET) — The Federal Home Loan Bank of San Francisco reached a $459 million deal with banks it accused in California state court of lying about the quality of billions of dollars in mortgage-backed securities that the lender bought, according to a filing to the U.S. Securities and Exchange Commission on Friday.

The FHLB didn’t disclose which banks were included in the settlement, though it has sued Credit Suisse (USA) LLC, Countrywide Financial Inc., Bank of America Corp., Deutsche Bank AG, Morgan Stanley & Co. and others, according…

Source: Law360

U.S. Supreme Court rejects RBC and Nomura mortgage suit appeal

The U.S. Supreme Court turned away an appeal by theRoyal Bank of Scotland Group (RBS), Nomura Holdings(NMR) and two other banks, in a case stemming from the collapse of two credit unions that owned more than $1.7 billion in mortgage-backed securities, according to an article in Bloomberg.

The article explained that the court refused to derail federal government lawsuits that seek billions of dollars over the sale of risky mortgage-backed securities.

At issue was how much time federal agencies have to file lawsuits. The high court appeal centered on a provision, known as the Extender Statute, enacted as part of the 1989 law that bailed out the savings and loan industry. The Extender Statute gave government agencies longer to press at least some cases.

The banks appealing in the case also included units of Wells Fargo & Co. and Novation Cos. The group had backing from three industry trade associations.

Source: Bloomberg

S&P nears $1 billion mortgage settlement

Standard & Poor’s is nearing a settlement of about $1 billion with the U.S. for allegedly misleading investors about its ratings of mortgage-backed securities before the financial crisis. Per Bloomberg:

The settlement between the McGraw Hill Financial(MHFL) and the Justice Department could close as early as this quarter.

New York-based S&P, the only credit rater sued by the Justice Department’s residential mortgage-backed securities working group, has alleged it was singled out because of its downgrade of U.S. debt in 2011, while its competitors, which issued the same grades for the same securities, weren’t sued by the U.S. The case is tentatively scheduled for trial in September.

Source: Bloomberg

Banks Rejected by U.S. High Court on Mortgage Securities Suits

The U.S. Supreme Court dealt a blow to Royal Bank of Scotland Group Plc and Nomura Holdings Inc. (8604), refusing to derail federal government lawsuits that seek billions of dollars over the sale of risky mortgage-backed securities.

The justices today turned away an appeal by four banks, including units of RBS and Nomura, in a case stemming from the collapse of two credit unions that owned more than $1.7 billion in those securities.

High court review might have helped RBS fight off a separate suit by the Federal Housing Finance Agency over $32 billion in mortgage-backed securities. RBS now is likely to settle that case for at least $1.7 billion, according to Elliott Stein and Alison Williams, analysts with Bloomberg Intelligence. Nomura may settle a smaller FHFA lawsuit against it as well.

At issue was how much time federal agencies have to file lawsuits. The high court appeal centered on a provision, known as the Extender Statute, enacted as part of the 1989 law that bailed out the savings and loan industry. The Extender Statute gave government agencies longer to press at least some cases.

Read on.

Issuers of mortgage-backed securities have 1 year to comply with risk rule

WASHINGTON (MarketWatch)—Originators of residential mortgage-backed securities will have a year to comply with a risk-retention rule under the Dodd-Frank law.

In October, the Federal Reserve Board of governors, along with five federal agencies including the Securities and Exchange Commission, voted to approve a risk-retention rule that would require sponsors of asset-backed securities to retain at least 5% of the credit risk of the assets collateralizing the issuance.

On Wednesday, the agencies posted the rule to the Federal Register, making it effective one year from then, on Dec. 24, 2015, for residential mortgage-backed securities and two years from that day for all other securitization types.

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$95M Settlement In Morgan Stanley MBS Suit Gets OK’d

Law360, Washington (December 22, 2014, 1:56 PM ET) — A New York federal judge on Friday signed off on a proposed $95 million deal to end a putative class action alleging Morgan Stanley & Co. misled institutional investors about shoddy subprime mortgage-backed securities, including about $17.2 million in attorneys’ fees and expenses.

U.S. District Judge Katherine B. Forrest approved the deal — tentatively put before the court in September — after noting that none of the 6,700 members of the potential class, led by a group of pension funds, had objected to the proposed allocation…

Source: Law360

BofA Sued by Credit Union Regulator for MBS Oversight

Bank of America Corp. and US Bancorp (USB) were sued by the agency that oversees federal credit unions, which claimed the banks failed as trustees over securities backed by home mortgages that defaulted after the 2008 credit crisis.

The lawsuit, filed in Manhattan federal court, claims that Bank of America and US Bancorp served as trustees for residential mortgage-backed securities in 99 trusts with an original face value of $5.8 billion.

They failed to review mortgage loan files for irregularities, missing “numerous problems,” including that the trusts “suffered enormous losses due to the high number of mortgage defaults, delinquencies, and foreclosures caused by defective loan origination and underwriting,” according to the complaint by the National Credit Union Administration Board.

“Even after ample evidence came to light that the trusts were riddled with defective loans, defendants shut their eyes to such problems,” according to the complaint. “As participants in many roles in the securitization process, defendants were economically intertwined with the parties they were supposed to police.”

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BofA, US Bancorp Pay $69M To Settle MBS Investor Action

Law360, New York (November 07, 2014, 3:22 PM ET) — Bank of America Corp. and U.S. Bancorp have agreed to pay $69 million to settle a class suit over their role as trustee for mortgage-backed securities containing shoddy loans issued by Washington Mutual Inc., which collapsed at the height of the 2008 financial crisis, according to a Friday court filing.

In the New York federal court filing, attorneys for the plaintiffs described the deal as the first-ever settlement in a class action over the conduct of a residential mortgage-backed securities trustee. Pension funds and other investors…

Source: Law360

JPMorgan Chase : to face U.S. class action in $10 billion MBS case

A federal judge on Tuesday said JPMorgan Chase & Co must face a class action lawsuit by investors who claimed the largest U.S. bank misled them about the safety of $10 billion of mortgage-backed securities it sold before the financial crisis.

U.S. District Judge Paul Oetken in Manhattan certified a class action as to JPMorgan’s liability but not as to damages, saying it was unclear how investors could value the certificates they bought, given how the market was “not particularly liquid.” He said the plaintiffs could try again to certify a class on damages.

Oetken ruled 10 months after JPMorgan reached a $13 billion settlement to resolve U.S. and state probes into the New York-based bank’s sale of mortgage securities.

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JPMorgan, Investors Propose $340M IndyMac MBS Settlement

Law360, Los Angeles (September 11, 2014, 10:18 PM ET) — The lead plaintiffs and underwriter banks in a class action accusing JPMorgan Chase & Co. and other financial institutions of misleading investors about the inherent risks of IndyMac Bank’s mortgage-backed securities reached a proposed $340 million settlement, according to a filing in New York federal court Thursday.

Banks, including JPMorgan, Credit Suisse Group AG, Deutsche Bank AG, UBS AG, Morgan Stanley and The Royal Bank of Scotland PLC, reached the deal to pay the investors to resolve claims the banks knew the loans wrapped up in…

Source: Law360