Deutsche Bank, MassMutual settle RMBS lawsuit

A Deutsche Bank (DB) unit and Massachusetts Mutual Life Insurance Co. have reached a settlement over residential mortgage-backed securities, with a federal judge signing off on the undisclosed terms Thursday.

U.S. District Judge Mark Mastroianni green-lit a motion filed by both parties on Wednesday to dismiss the ongoing lawsuit.

No details about the settlement were disclosed in the motion, with the motions only stating that the two were settling.

“We are pleased to have resolved this matter,” Oksana Poltavets, assistant vice president for press and media relations at Deutsche Bank, Germany’s largest bank.

The 2011 lawsuit arose over residential mortgage-backed securitizations that went south during the housing crash.

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Goldman Sachs to pay $272 million in toxic mortgage lawsuit

Goldman Sachs (GS) will pay $272 million to settle a lawsuit over losses suffered due to alleged misrepresentations of the quality of mortgage loans that backed crisis-era mortgage-backed securities.

According to a Reuters report, the settlement is with investors led by NECA-IBEW Health & Welfare Fund, an electrical workers’ pension fund in Decatur, Illinois.

The lawsuit stretches back to 2008, when NECA-IBEW sued Goldman Sachs, arguing that Goldman made false statements or omitted key information regarding the nature of the mortgages it sold into 17 different trusts during 2007.

From the Reuters report:

NECA-IBEW accused Goldman of misleading investors about the underwriting of home loans backing the securities, including the quality of appraisals and whether borrowers were capable of repaying their loans.

The fund said the securities’ prices collapsed during and after the financial crisis, while their credit ratings fell to low, “triple-C” junk grades from “triple-A.”

HousingWire covered the lawsuit when it was originally filed.

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Goldman Sachs To Drop $270M To Settle $6B RMBS Suit

A drop in the bucket….

Law360, Los Angeles (July 31, 2015, 9:47 PM ET) — Goldman Sachs Group & Co. has tentatively agreed to pay $270 million to resolve a putative class action brought by a union pension fund accusing the investment banking giant of selling $6 billion in shoddy residential mortgage-backed securities, according to multiple media reports published Friday.

The news reports, each citing anonymous sources, said Goldman agreed to the settlement to resolve claims brought by NECA-IBEW Health & Welfare Fund that Goldman duped more than 400 investors by giving nearly identical misstatements about the loans underlying each offering….

Source: Law360

Bank Of America Made $204 Million Because It Sold Bad Mortgages More Than 6 Years Ago

A win for Deutsche Bank in a mortgage lawsuit protects other lenders of questionable securities

Bank of America brought in $22.3 billion in revenue in the second quarter. Its profit — $5.3 billion — was almost double compared to this time last year, CEO Brian Moynihan said, because expenses were lower and the bank made more loans and originated more mortgages amid an improving U.S. economy.

But a small slice of BofA’s earnings boost, $204 million, came from a relatively obscure New York court case about an even more obscure pre-crisis mortgage deal.

The transaction in question is generally referred to simply as ACE. ACE was a 2006 residential mortgage-backed security whose full name is ACE Securities Corp., Home Equity Loan Trust, Series 2006–SL2, because that’s the sort of unwieldy jumble of a name banks gave mortgage securities in 2006. Also, because ACE was a mortgage security issued in 2006, it turned out to be filled with a lot of really bad mortgages. The mortgages in ACE were so bad — 2,375 of 5,000 loans were allegedly misrepresented — that the investors who bought the security sued the unit of Deutsche Bank that sold it. But it took them until 2012 to realize that and file a lawsuit against Deutsche — just over six years after the deal was done.

And that was the problem: the statute of limitations to sue the seller in this kind of security is six years. But when do those six years start? Deutsche argued they began when the deal was done in 2006. The investors argued that they began when Deutsche refused to buy back the bad loans as a way to solve the disagreement in 2012.

The question was finally settled last month when a New York judge ruled that the statute of limitations began in 2006. The investors who’d bought what was now plainly junk were out of luck. Had they realized the mortgages weren’t quite what Deutsche said they were just a year earlier, or — as you might expect of sophisticated institutional investors — when they were buying them in 2006, they’d have a case. But not now.

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JPMorgan reaches $388 million settlement in mortgage securities case

Settlement but not jail time…..

(Reuters) – JPMorgan Chase & Co agreed to pay $388 million to settle a suit by investors claiming that the largest U.S. bank had misled them about the safety of $10 billion worth of residential mortgage-backed securities it sold before the financial crisis.

The lawsuit, brought by Fort Worth Employees’ Retirement Fund and other investors in offerings made before the 2008 financial crisis, accused JPMorgan of misleading them about the underwriting, appraisals and credit quality of the home loans underlying the certificates.

The lawsuit said that after Lehman Brothers Holdings Inc failed, the certificates were worth at most 62 cents on the dollar.

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Exclusive: U.S. housing regulator paid law firms $373 million to sue banks

NEW YORK (Reuters) – The Federal Housing Finance Agency disclosed on Thursday that it paid two law firms over $373 million since 2010 to pursue litigation against several banks over mortgage-backed securities sold to Fannie Mae and Freddie Mac before the financial crisis.

The FHFA, which has acted as conservator for Fannie <FNMA.OB> and Freddie <FMCC.OB> since the government took them over in 2008, disclosed the sums in response to a Freedom of Information Act request by Reuters.

The disclosure marked the first time the FHFA had said how much it had paid Quinn Emanuel Urquhart & Sullivan LLP and Kasowitz Benson Torres Friedman LLP.

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JPMorgan Investor’s Bid Axed For ‘London Whale,’ RMBS Docs

Law360, Wilmington (April 23, 2015, 10:57 PM ET) — A Delaware Chancery judge on Thursday rejected a JPMorgan Chase & Co. shareholder’s request for books and records relating to the bank’s residential mortgage-backed securities operations and “London Whale” trading fiasco, finding the action was barred by the failure of suits brought by other investors.

At a hearing in Wilmington, Vice Chancellor J. Travis Laster tossed the so-called Section 220 complaint, ruling the dismissal by New York courts of derivative suits targeting the same issues had a preclusive effect on shareholder David Shaev’s ability bring a…

Source: Law360

Bank of America Settles RMBS Suit

On April 2, 2015, plaintiffs BNP Paribas Mortgage Corporation and BNP Paribas and defendant Bank of America filed a Joint Stipulation of Dismissal with Prejudice stating that both parties had reached an agreement to settle claims arising out of Bank of America’s handling of $480.7 million worth of mortgage-backed notes issued by Taylor Bean and Whitaker’s Ocala Funding LLC. Plaintiffs Complaint alleged that Bank of America, which served as agent, custodian, depositor, and Indentured Trustee of the Ocala facility, failed to live up to its contractual obligations to secure and protect the cash and mortgage loans collateralizing the notes. The details of the settlement are not yet public. Joint Stipulation.

Source: JDSupra

U.S. agency seeks $1.1 billion as Nomura, RBS face mortgage bond trial

A U.S. housing regulator urged a federal judge on Monday to award it $1.1 billion due to false claims made about “crap” mortgages underlying securities sold by Nomura Holdings Inc (>> Nomura Holdings, Inc.) to Fannie Mae (>> Federal National Mortgage Assctn Fnni Me) and Freddie Mac (>> Federal Home Loan Mortgage Corp) ahead of the 2008 financial crisis.

At the start of a trial in Manhattan federal court, a lawyer for the Federal Housing Finance Agency said misrepresentations by Nomura and Royal Bank of Scotland Group Plc (>> Royal Bank of Scotland Group plc), an underwriter, about loans underlying $2 billion (1.3 billion pounds) in securities exemplified broader misconduct by banks ahead of the crash.

“Nomura and RBS were very willing participants in creating the worst economic crisis since the Great Depression,” Philippe Selendy, a lawyer for the FHFA, said in an opening statement.

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Former RBS trader pleads guilty in U.S. to cheating customers

(Reuters) – A bond trader pleaded guilty on Wednesday to conspiring to defraud Royal Bank of Scotland Group Plc (>> Royal Bank of Scotland Group plc) customers by lying about the prices of bond transactions he handled for them in an effort to boost the bank’s profit.

Matthew Katke, 34, of New York, pleaded guilty to one count of conspiracy to commit securities fraud and will cooperate with prosecutors, U.S. Attorney Deirdre Daly in Connecticut said.

The plea came one year after a federal jury in New Haven, Connecticut in a similar case convicted former Jefferies Group Inc managing director Jesse Litvak for cheating his customers on prices of mortgage-backed securities.

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