rmbs suit

Prudential Settles $2B RMBS Suit with Bank of America and Merrill Lynch & Co.

On April 22, 2015, Bank of America and Merrill Lynch reached an agreement with several Prudential Insurance Co. affiliates to settle two lawsuits brought by Prudential.  Prudential had alleged that Bank of America and Merrill Lynch made false statements about the quality of $2.1 billion worth of residential mortgage backed securities they sold to Prudential.  The parties filed a stipulation of dismissal with prejudice but the settlement terms are otherwise undisclosed.  Stipulation.

NY Appellate Court Affirms Dismissal of Walnut Place’s Claims Against BofA and Countrywide

On June 28, 2012, the New York Appellate Division, First Department, affirmed the dismissal of Walnut Place’s $1.1 billion RMBS suit against Countrywide and Bank of America. Walnut Place sued derivatively on behalf of an RMBS trustee seeking to compel repurchase of securitized loans due to alleged breaches of representations and warranties about the loans in the pooling and servicing agreement (“PSA”). The court held that the “no-action” clause in the PSA precludes the investor plaintiffs from bringing any action related to the PSA other than for an “event of default,” which is defined to include only loan servicing-related claims and does not include the representation and warranty claims plaintiffs attempted to assert. Order.

Federal Home Loan Bank of Boston Files RMBS Suit

On April 20, 2011, the Federal Home Loan Bank of Boston (“FHLB Boston”) filed suit against over eighty defendants in Massachusetts state court. FHLB Boston alleges that various underwriters, depositors, individual defendants, and rating agencies made misstatements and omissions in the sale of mortgage-backed securities. The alleged misstatements and omissions include those about the originating banks’ adherence to their stated underwriting guidelines, appraisals, credit ratings, compliance with predatory lending restrictions, and the enforceability of the underlying mortgages. FHLB Boston joins several other Federal Home Loan Banks that already have filed suit in courts throughout the United States over their purchases of mortgage-backed securities, including the Federal Home Loan Banks of Atlanta, Chicago, Indianapolis, Pittsburgh, San Francisco, and Seattle. Complaint.