Bank of New York Mellon to face lawsuit over toxic mortgages
Alledgedly caused $1.12 billion in investor losses
A U.S. judge ruled that Bank of New York Mellon must face a lawsuit seeking to hold it liable for causing $1.12 billion of investor losses due to toxic residential mortgages, an article in Reuters stated.
From the Reuters article by Jonathan Stempel:
U.S. District Judge Gregory Woods said Belgium's Royal Park Investments SA/NV may pursue claims that the bank, as trustee for trusts dating from 2005 to 2007, ignored widespread, systemic abuse in how the underlying loans were underwritten and serviced, and failed to require that bad loans be repurchased.
"Indeed," Woods wrote in his decision on Wednesday, "it would be implausible to assume that somehow all of the mortgage loans underlying the trusts miraculously avoided the pervasive practices of the industry at the time."
The article noted that other Manhattan federal judges in the last year have let Royal Park pursue similar claims against Deutsche Bank AG and HSBC Holdings Plc.
Back in August 2015, the Federal Deposit Insurance Corporation sued Bank of New York Mellon for more than $2 billion in mortgage-backed securities purchased by a failed Texas bank, claiming BNY Mellon breached its duties as bond trustee to protect investors.