National Credit Union Administration (“NCUA”)

CFPB Issues Final HMDA Rule to Provide Relief to Smaller Institutions

 

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.

S.D.N.Y. Allows NCUA to Amend RMBS Suit Against Deutsche Bank and Grants in Part and Denies in Part Motion to Dismiss

 

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.

Federal Bank Regulatory Agencies Release Joint Statement on Risk-Based Approach to BSA/AML Supervision

 

On July 22, the Federal Reserve Board, FDIC, Office of the Comptroller of the Currency (OCC), National Credit Union Administration (NCUA) and the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) released a joint statement outlining the agencies’ risk-based approach to examining banks’ BSA/AML compliance programs. Release.

NCUA Enters $445 Million Settlement with UBS in Lawsuit Alleging Untrue Statements in Connection with Sale of RMBS

 

On April 25, 2017, the National Credit Union Administration (“NCUA“), as liquidating agent for U.S. Central Federal Credit Union and Western Corporate Federal Credit Union, voluntarily dismissed its complaint against UBS Securities, LLC (“UBS“) and Mortgage Asset Securitization, Inc., in the United States District Court for the District of Kansas following a settlement between the parties. Under the terms of the settlement, UBS agreed to pay $445 million to end the NCUA’s five-year old lawsuit (the filing of the lawsuit was covered here). The NCUA’s suit involved claims for losses suffered by the two failed credit unions from allegedly untrue statements and omissions of fact by UBS regarding RMBS that it underwrote and sold. This settlement is in addition to the $79.3 million the NCUA also recovered from UBS in April 2016 for RMBS losses suffered by two other defunct credit unions. Voluntary Dismissal.

National Credit Union Administration Board Accepts UBS Securities LLC Offer of Judgment

On February 25, the National Credit Union Administration Board (“NCUA”) accepted an offer of judgment tendered by UBS Securities LLC (“UBS”) in the amount of $33,014,285 plus prejudgment interest, which will be calculated by the court. NCUA and UBS will attempt to agree on costs and fees also to be paid by UBS.  Acting as the liquidating agent for Southwest Corporate Federal Credit Union and Members United Corporate Federal Credit Union, NCUA’s complaint alleged that UBS made material misstatements in connection with the sale of 20 RMBS certificates, alleging more than $918 million in actual gross losses.  UBS specified in the offer of judgment that its offer should not be construed as an admission of liability. Offer of Judgment. Complaint.

Judge Scheindlin Denies Motion to Dismiss NCUA Claims

On July 20, 2015, Judge Scheindlin of United States District Court for the Southern District of New York denied HSBC Bank USA, NA’s (“HSBC”) motion to dismiss claims brought by the National Credit Union Administration (“NCUA”) related to the administration of mortgage-backed securities worth $2 billion.  NCUA alleges that HSBC failed to perform its duties as the indentured trustee for 37 RMBS trusts.  Judge Scheindlin rejected HSBC’s argument that NCUA lacked standing to bring the suit because most of the debt had been resecuritized, and held that NCUA has standing to pursue the claims against HSBC derivatively because the current trustee of the resecuritized loans tacitly consented to the action by remaining neutral.  Opinion and Order.