May 31, 2021

Three Firms Settle With Pension Fund for $235 Million Over RMBS Fraud Complaints

first_img Demand Propels Home Prices Upward 2 days ago The Week Ahead: Nearing the Forbearance Exit 2 days ago Demand Propels Home Prices Upward 2 days ago Share Save Citigroup Goldman Sachs RMBS Settlements UBS Financial Services 2015-02-17 Brian Honea Servicers Navigate the Post-Pandemic World 2 days ago Servicers Navigate the Post-Pandemic World 2 days ago About Author: Brian Honea Tagged with: Citigroup Goldman Sachs RMBS Settlements UBS Financial Services Three Firms Settle With Pension Fund for $235 Million Over RMBS Fraud Complaints in Daily Dose, Featured, News, Secondary Market Three financial institutions – Citigroup Global Markets, Goldman Sachs, and UBS Securities – have agreed to a settlement for $235 million with a pension fund that bought Residential Capital to resolve allegations of fraud on the part of the underwriters involving mortgage-backed securities, according to media reports.The plaintiffs in the case, New Jersey Carpenters Health Fund, filed a motion for preliminary settlement approval on Friday, February 13, to end a lawsuit involving the sale of RMBS to the health fund and other investors by Residential Accredited Loans, Inc. (RALI) and other affiliates during the run-up to the financial crisis, in 2006 and 2007.According to the class-action lawsuit which was originally filed in September 2008, the underwriters made “material misstatements and omissions of material facts” in the offering documents, which was in violation of the Securities Act. The complaint also alleges that Residential Capital and the defendant underwriters “failed to conduct adequate due diligence with respect to the originators’ compliance with the loan underwriting guidelines stated in the offering documents.” According to the complaint, Residential Capital and the underwriter defendants also failed to disclose weaknesses in the loans for 59 offerings.The plaintiffs allege that Residential Capital, which had become one of the world’s largest issuers of mortgage-backed securities, sought out ratings agencies that gave favorable ratings to its subprime mortgages. These mortgages later received junk ratings when they went into default or foreclosure, according to the plaintiffs.The defendants gained a partial victory in 2010 when a district judge threw out 55 of the offerings, leaving just four at issue in the case; however, on appeal, 13 of the offerings were restored to the case in April 2013, according to the motion filed on Friday. A partial settlement was reached three months later in July 2013 when the issuing defendants agreed to pay $100 million in cash to resolve the claims against them. The $235 million settlement was originally reached in November 2014 and agreed to on Friday, pushing the total of settlements in the case up to $335 million.”Over seven years, the case had many difficult twists and turns, including an initial denial of class certification that would have meant an end to the case  had we not kept pursuing it,” said Joel Laitman, attorney for the New Jersey Carpenters Health Fund. “In the end, it is a favorable result for investors, particularly in light of continued risks.”Spokespeople from Goldman Sachs and Citigroup declined to comment on the settlement. Representatives from UBS were not immediately available for comment. Related Articles Data Provider Black Knight to Acquire Top of Mind 2 days agocenter_img Brian Honea’s writing and editing career spans nearly two decades across many forms of media. He served as sports editor for two suburban newspaper chains in the DFW area and has freelanced for such publications as the Yahoo! Contributor Network, Dallas Home Improvement magazine, and the Dallas Morning News. He has written four non-fiction sports books, the latest of which, The Life of Coach Chuck Curtis, was published by the TCU Press in December 2014. A lifelong Texan, Brian received his master’s degree from Amberton University in Garland. February 17, 2015 1,293 Views Sign up for DS News Daily Subscribe Governmental Measures Target Expanded Access to Affordable Housing 2 days ago The Best Markets For Residential Property Investors 2 days ago  Print This Post Governmental Measures Target Expanded Access to Affordable Housing 2 days ago The Best Markets For Residential Property Investors 2 days ago Data Provider Black Knight to Acquire Top of Mind 2 days ago Previous: Bank of America Further Reduces Size of Delinquent Mortgage Loan Division Next: RedVision Celebrates Huge Growth in Abstracting Coverage Home / Daily Dose / Three Firms Settle With Pension Fund for $235 Million Over RMBS Fraud Complaintslast_img

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