Federal Deposit Insurance Corporation v. U.S. Bank NA | breaches of two securitization trusts totaling more than $248 million
UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK
FEDERAL DEPOSIT INSURANCE CORPORATION AS RECEIVER FOR GUARANTY BANK Plaintiff, -against- U.S. BANK NATIONAL ASSOCIATION, DefendantNATURE OF ACTION
1. This is an action for damages against US Bank for its breaches of contractual and statutory duties under the governing agreements, the New York Streit Act, N.Y. Real Property Law § 124, et seq. (the “Streit Act”), and under the federal Trust Indenture Act of 1939 (the “TIA”), 15 U.S.C. § 77aaa, et seq.1 as Trustee for two securitization trusts, Harborview Mortgage Loan Trust, Pass-Through Certificates, Series 2005-8 (“HVMLT 2005-8”) and Harborview Mortgage Loan Trust, Pass-Through Certificates, Series 2005-16 (“HVMLT 2005-16”) ( collectively the “Covered Trusts”), which issued residential mortgage-backed securities (“RMBS”) purchased by investors, including Guaranty Bank (“Guaranty”). 2. This action seeks to hold US Bank accountable for abdicating its fundamental duties as the trustee to certificateholders such as Plaintiff. Under the agreements governing the Covered Trusts, US Bank accepted virtually all of the powers designed to protect the certificateholders and was compensated for that role. US Bank was essentially Plaintiff’s sole source of protection against breaches of the governing agreements by the other parties to those agreements, including the sponsor that sold the loans to the Covered Trusts and the servicer tasked with servicing the mortgage loans. US Bank, however, shirked its duty to exercise its powers to protect Plaintiff and instead attempted to shorn itself of the responsibilities that trusteeship imports. While US Bank stood idly for years, the sponsor kept defective mortgage loans in the Covered Trusts, the servicer reaped excessive fees for servicing the defaulted loans from the Covered Trusts, and Plaintiff was left to suffer enormous losses. 3. The Covered Trusts were created to facilitate RMBS transactions sold to investors in 2005. Both of the RMBS transactions were sponsored by Greenwich Capital Financial Products, Inc. (referred to herein as the “Sponsor”), and contained loans originated by Countrywide Home Loans, Inc. (“Countrywide” or the “Originator”). 4. Prior to its failure, Guaranty purchased the RMBS certificates at issue in this action with a purchase price of over $248 million (the “Certificates”) [...]