On March 7, KIRP, LLC sued Texas-based mortgage servicer Nationstar Mortgage LLC in the Supreme Court of the State of New York in connection with Nationstar’s alleged improper conduct in servicing mortgage loans that are collateral for RMBS certificates owned by KIRP. Specifically, KIRP alleges that Nationstar auctioned off defaulted mortgages loans at prices far below the loans’ value in breach of Nationstar’s obligations under its master servicing contract. KIRP further alleges that Nationstar conducted these auctions to recoup advances Nationstar made to troubled borrowers, in breach of its duties to place the interests of certificate holders above its own interests. KIRP purports to sue on behalf of all certificate holders in the six RMBS trusts at issue. KIRP asserts claims for breach of contract, conversion, unjust enrichment and declaratory judgment, and seeks a temporary restraining order, disgorgement of profits, damages, interest and reimbursement of costs and expenses. Complaint.
LLC
Southern District of Ohio Dismisses Suit Against Ratings Agencies
On September 26, 2011, Judge James L. Graham of the United States District Court for the Southern District of Ohio dismissed a lawsuit brought by five Ohio state pension funds against Standard & Poor’s Financial Services, LLC, Moody’s Investors Service, Inc., and Fitch, Inc., alleging violations of the Ohio Securities Act and negligent misrepresentation. The Ohio pension funds alleged that the credit ratings assigned to certain residential and commercial mortgage-backed securities were false, negligently assigned, based on flawed methodologies, and caused $457 million of losses. The Court, applying both Ohio and New York law to the negligent misrepresentation claim, dismissed all claims. The Court found that Defendants’ ratings were non-actionable opinions and, absent specific allegations of fraudulent intent or a duty to the Ohio pension funds, Defendants could not be held liable for alleged negligence in their ratings methodologies. Decision.