Bank of America NA

NCUA Sues U.S. Bank and Bank of America for Allegedly Failing to Comply with RMBS Trustee Duties

On December 16, National Credit Union Administration filed a lawsuit in the United States District Court for the Southern District of New York against U.S. Bank N.A. and Bank of America N.A., in their capacity as trustees for 99 RMBS trusts. NCUA filed the suit as liquidating agent for five failed credit unions collectively alleged to have purchased certificates in the trusts at issue. NCUA alleges that U.S. Bank and Bank of America breached their duties under the governing trust agreements by failing to properly review and monitor the loans backing the RMBS, failing to notify the investors of deficiencies in the loans, failing to take action to address those alleged deficiencies, and failing to require the repurchase of defective loans. The complaint asserts causes of action under the Trust Indenture Act and the Streit Act, a New York statute that governs administration of mortgage trusts, and seeks compensatory damages and unspecified equitable relief.  Complaint.

Court Grants, in Large Part, Bank of America’s Motion to Dismiss Suit by CIFG

On September 23, Justice Charles E. Ramos of New York State Supreme Court granted in part defendant Bank of America NA’s motion to dismiss a suit brought by monoline insurer CIFG Assurance North America Inc.  CIFG claims $170 million in damages in connection with its insurance of two re-REMIC RMBS transactions.  The court dismissed CIFG’s fraudulent inducement claim for insufficient particularity, finding CIFG’s allegations were not tailored to the RMBS at issue.  The court also dismissed CIFG’s negligent misrepresentation claim based on the arm’s-length relationship between the parties, its claim for rescission or rescissory damages because it had continued to accept insurance premiums, and its contractual indemnity claim.  The court allowed CIFG’s breach of contract claim to proceed, but dismissed its breach of the covenant of good faith and fair dealing claim as duplicative.  Decision.