By the Lending Lies Team
Too Big to Fail behemoth Wells Fargo faces another lawsuit over faulty residential mortgage-backed securities. As investors become aware of the fraudulent securities purchased, more lawsuits are sure to be ignited.
According to a Reuters article by Jonathan Stempel, U.S. District Judge Katherine Polk Failla in Manhattan said on Thursday that Wells Fargo must face litigation seeking to hold it responsible for billions of dollars of claimed investor losses. Judge Failla is the same judge that ruled last week in Costa v. Deutsche Bank that the New York six-year statute of limitations applied. It appears New York has a judge who applies the law as written.
The plaintiffs in this settlement include BlackRock, Pacific Investment Management, Prudential Financial and others.
From the article:
Failla’s 80-page decision covers five lawsuits, which comprise one of the largest remaining pieces of U.S. litigation seeking to hold banks liable for risky mortgage securities that were a major cause of the 2008 global financial crisis.
“It is plaintiffs’ contention that such allegations go far beyond many other RMBS trustee complaints, which themselves have been found sufficient to state a claim,” Failla wrote, without ruling on the merits. “The court agrees.”
While litigation that dates back to the financial crisis is winding down for Wells Fargo, it wasn’t too long ago that it reached a settlement that dealt with faulty MBS from that period.
Earlier in March, Deutsche Bank, Royal Bank of Scotland, and Wells Fargo reached a $165 million settlement in class action lawsuit brought by pension funds over faulty crisis-era mortgages originated NovaStar Mortgage.
The lawsuit charged NovaStar, RBS, Wells Fargo and Deutsche Bank with “misleading investors into believing that the securities they bought were safer than they proved to be.” This is likely the tip of the iceberg as many investors discover they bought a defective and costly product called mortgage backed securities.
Filed under: foreclosure | Tagged: investor fraud, Judge Katherine Polk Failla, Wells Fargo |
Wells Fargo is the only bank to escape a large settlement with the government.
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