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US Bancorp and Bank of America win dismissal of mortgage lawsuit

US Bancorp and Bank of America have been exempted from facing lawsuits accusing them of failing their duty as trustees for residential mortgage-backed securities that were affected due to the 2008 economic crisis.

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US District Judge Katherine Forrest in Manhattan ruled against the three suits that claimed breaches over mortgage-backed securities.

The cases are part of investors’ effort to target banks in their roles as trustees of securities backed by home loans that defaulted during the economic crisis.

As per the court filing, the banks presided over securities amounting to $5.3bn in one of the cases. However, Forrest said in her decision that the National Credit Union Administration Board was not eligible to sue after it moved the securities at issue into new, independent trusts, reported Bloomberg.

In another case, US Bank was sued by a BlackRock fund which claimed that the bank being the trustee of 843 trusts did not give written notice of breaches of mortgage loan representations.

In this case, the judge said that each of the trusts was subject to the governing documents for different loan groups.

All plaintiffs can amend their complaints.

Following the economic downturn, investors have been trying to target trustees with the aim of seeking some compensation against the losses where trustees have been accused of breaching their duties by failing to force lenders and bond issuers to buy back troubled loans.

 


Image: The Bank of America Tower in New York City. Photo: courtesy of User Jleon.