On October 10, the Consumer Financial Protection Bureau (CFPB) issued a rule which finalizes certain aspects of its May 2019 Notice of Proposed Rulemaking under the Home Mortgage Disclosure Act (HDMA). It extends for two years the current temporary threshold for collecting and reporting data about open-end lines of credit under the HDMA. The rule also clarifies partial exemptions from certain HMDA requirements which Congress added in the EGRRCPA. Release.
Judge Sidney H. Stein in the United States District Court for the Southern District of New York allowed the National Credit Union Administration (NCUA) to amend its complaint to add a new plaintiff to attempt to establish standing and proceed with its lawsuit against Deutsche Bank National Trust Company (DBNTC), while granting in part DBNTC’s motion to dismiss, which limited the proceeding to NCUA’s breach of contract claims.
Originally filed November 10, 2014 (as covered here), NCUA’s complaint alleges that DBNTC failed in its duties as trustee for 37 RMBS trusts, resulting in losses to those trusts and their investors, including five failed credit unions that were taken over by NCUA. Judge Stein allowed NCUA to amend its complaint to insert a different plaintiff—Graeme W. Bush, a specially-appointed trustee selected by Bank of New York Mellon—with direct standing for a variety of NCUA Guaranteed Note Trusts (NGN Trusts) that were created from the assets of five failed credit unions after the financial crisis. Because Bank of New York Mellon serves as the trustee for the NGN Trusts, NCUA does not have direct standing, and courts had not settled on whether NCUA had derivative standing on behalf of the NGN Trusts. The NCUA’s substitution followed a Second Circuit decision in a similar case affirming the dismissal of NCUA’s derivative claims for lack of standing. NCUA also successfully substituted itself as a direct plaintiff for NGN Trusts that have “unwound” and whose underlying certificates have been returned to NCUA.
After allowing the amendment, Judge Stein went on to grant in part and deny in part DBNTC’s motion to dismiss the amended complaint. While Judge Stein found that NCUA had stated a claim for breach of contract, he found that NCUA’s negligence and breach of fiduciary duty claims were barred by the economic loss doctrine. Further, Judge Stein stayed NCUA’s claims regarding DBNTC’s use of trust funds for indemnification, finding that DBNTC may be required to return the trust funds if there is a negligence finding against it, pursuant to the terms of the governing agreements. Opinion & Order.
On July 10, 2015, Judge Alvin Hellerstein of the Southern District of New York granted defendant WMC Mortgage LLC’s motion for judgment on the pleadings in an action brought by the Federal Housing Financial Agency (“FHFA”) and Deutsche Bank National Trust Co. (“DBNTC”), in its capacity as Trustee of the SABR 2006-WM4 Trust. Judge Hellerstein held that the action was time-barred under New York’s six-year statute of limitations, citing the New York Court of Appeals’ decision in ACE Securities Corp., Home Equity Loan Trust, Series 2006-SL2 v. DB Structured Products, Inc. Judge Hellerstein concluded that the date on which the statute of limitations began to run was the signing date of the Pooling and Servicing Agreement, as opposed to the closing date, because the signing date was the point at which “all the right, title and interest” to the mortgage loans were transferred to the Trustee, and when all misrepresentations were made. Order.
