On December 22 and 23, U.S. Bank National Association, as trustee for three RMBS trusts, filed three separate summonses with notice in the Supreme Court of the State of New York. U.S. Bank alleges that Citigroup misrepresented the quality of mortgage loans underlying $528 million in RMBS, and that it breached its duties as servicer by failing to notify the trustee of representation and warranty breaches that it discovered. The trustee seeks compensatory and rescissory damages, along with repurchase of loans not complying with the applicable representations and warranties. Summons with Notice (2007-AMC2). Summons with Notice (2007-AHL2). Summons with Notice (2007-AR7).
Supreme Court of the State of New York
JPMorgan Settles $5B RMBS Suits Brought By German Banks
On October 23, JP Morgan agreed to pay an undisclosed sum to settle cases brought by three German banks in the Supreme Court of the State of New York concerning the banks’ alleged purchase of $5 billion of RMBS. Sealink Stipulation. Bayern Stipulation. LBBW Stipulation.
JPMorgan Settles $5B RMBS Suits Brought By German Banks
On October 23, JP Morgan agreed to pay an undisclosed sum to settle cases brought by three German banks in the Supreme Court of the State of New York concerning the banks’ alleged purchase of $5 billion of RMBS. Sealink Stipulation. Bayern Stipulation. LBBW Stipulation.
DZ Bank AG Sues UBS in New York State Court In Connection With $160 Million of RMBS
On July 25, Deutsche Zentral-Genossenschaftsbank AG (“DZ Bank”) filed a summons with notice against several UBS entities in the Supreme Court of the State of New York. DZ Bank alleges that UBS misrepresented the underwriting standards used to originate mortgage loans underlying RMBS that DZ Bank purchased for more than $160 million. DZ Bank also alleges that UBS’s offering materials misrepresented information about the legal validity of the trusts and the transfer of loans into the trusts. DZ Bank brings claims for common-law fraud, fraudulent inducement, negligent misrepresentation, aiding and abetting fraud, declaratory judgment, and contract claims, including rescission, restitution, and mutual mistake. Summons with Notice.
Asset Management Fund Sues Morgan Stanley In Connection With Sale Of $122 Million in RMBS
On May 2, 2012, mutual fund Asset Management Fund and related affiliates filed a summons with notice to commence an action against Morgan Stanley in the Supreme Court of the State of New York seeking $122 million in compensatory and $122 million in punitive damages arising from alleged fraudulent misstatements and omissions made in connection with RMBS. The fund makes claims for fraud, negligent misrepresentation, aiding and abetting fraud, declaratory judgment, breach of contract, and rescission. Summons.
Ambac Sues JP Morgan Over Insurance of Bear Stearns RMBS
On March 30, 2012, Ambac Assurance Corp. brought claims against J.P. Morgan Chase, EMC Mortgage, and Bear Stearns in the Supreme Court of the State of New York, alleging fraudulent marketing of RMBS by Bear Stearns. Ambac alleges that Bear Stearns, which was acquired by J.P. Morgan, misrepresented the quality of the underlying mortgage loans when obtaining insurance from Ambac on the RMBS. Ambac, which alleges losses of $200 million, brings claims for fraudulent inducement, breach of contract, and successor liability. Complaint.
Dexia Sues Merrill Lynch Over $527 Million in RMBS
On March 29, 2012, Dexia filed suit against Merrill Lynch & Co. and related entities in the Supreme Court of the State of New York in connection with $527 million in RMBS it allegedly purchased in fifteen offerings in 2006 and 2007. Dexia alleges that Merrill Lynch made misrepresentations about and ignored the deficiencies in the underwriting standards and appraisal practices used by the originators of the loans underlying the RMBS, as well as that the credit ratings were inflated due to false information allegedly provided to the ratings agencies by Merrill. The causes of action alleged are fraud, aiding and abetting fraud, and negligent misrepresentation. Dexia, which is represented by the same counsel who represent LBW in its suit against Countrywide, seeks unspecified money damages and rescission. Complaint.
Landesbank Baden-Wuttenberg Files $455 Million RMBS Suit Against Countrywide
On March 29, 2012, German bank Landesbank Baden-Wurttemberg (“LBW”) filed a suit against Countrywide Financial Corp. and related entities in the Supreme Court of the State of New York alleging that Countrywide misrepresented the underwriting standards and appraisals for the loans underlying $455 million of RMBS allegedly purchased by LBW in eleven offerings between 2005 and 2007. LBW further alleges that Countrywide misrepresented information to credit rating agencies resulting in faulty ratings, misrepresented that the issuing trusts possessed good title to the underlying loans, and ignored underwriting deficiencies by other originators whose loans it purchased. LBW alleges claims for fraud, aiding and abetting fraud, negligent misrepresentation, successor and vicarious liability, and violations of Sections 11, 12(a)(2), and 15 of the Securities Act of 1933. LBW seeks unspecified money damages and rescission. Complaint.
RMBS Investors File $250 Million Derivative Suit Against HSBC
On March 28, 2012, investors in Ace Securities Corp. Home Equity Loan Trust, Series 2006-SL2 commenced a derivative lawsuit, purportedly on behalf of the Trust, against HSBC Bank, as trustee, and DB Structured Products, Inc., an affiliate of Deutsche Bank, the loan originator. In a summons with notice filed in the Supreme Court of the State of New York, plaintiffs state that they seek $250 million in damages for breach of repurchase obligations, based on alleged misrepresentations about the quality of the loans in the Trust’s collateral pool and borrowers’ ability to pay. The causes of action are for breach of contract and specific performance. Complaint.
Stichting Pensioenfonds Sues WaMu, Bear Stearns For RMBS Losses
On December 7, 2011, Stichting Pensioenfonds, a Dutch pension firm, filed a complaint against JP Morgan Chase & Co., and related entities and individuals, in the Supreme Court of the State of New York. Stichting seeks to recover losses incurred on 26 RMBS certificates purchased from JP Morgan, Bear Stearns & Co., and Washington Mutual Bank. Stichting alleges that the defendants made false or misleading statements regarding the quality of the mortgages underlying the securities. Stichting is pursuing claims based on Sections 11, 12(a)(2), and 15 of the Securities Act of 1933, as well as common law claims of negligent misrepresentation, fraud, and aiding and abetting fraud. Complaint.