By Laura Alix
The National Credit Union Administration recently filed suit in federal court against Wells Fargo Bank National Association, alleging the megabank failed in its duties as the trustee of 27 residential mortgage-backed securities trusts and, in so doing, violated state and federal law.
"Like other trustees against whom NCUA is pursuing claims, Wells Fargo neglected its statutory and contractual obligations to certificate holders, including the five corporate credit unions," NCUA Board Chairman Debbie Matz said in a statement. "This litigation is intended to hold Wells Fargo accountable for losses caused by that neglect."
According to the NCUA, five corporate credit unions purchased about $2.4 billion in residential mortgage-backed securities from those trusts between 2004 and 2007. Those securities were faulty and lost substantial value, contributing to the failure of all five credit unions, the NCUA said.
The NCUA said its complaint states that, despite knowing about defects in the mortgage loans, Wells Fargo failed to provide required notices to certificate holders and other parties and failed to take timely action to force the repurchase, substitution, or cure of defective mortgage loans or otherwise preserve trust remedies.
It’s not the first time the federal regulator has taken up the fight against a multibillion dollar financial institutions. Earlier this year, the NCUA also filed a suite of lawsuits against more than a dozen international banks, alleging their involvement in the sale of faulty securities and manipulation of the LIBOR hurt corporate credit unions in America.
The National Credit Union Administration recently filed suit in federal court against Wells Fargo Bank National Association, alleging the megabank failed in its duties as the trustee of 27 residential mortgage-backed securities trusts and, in so doing, violated state and federal law.
"Like other trustees against whom NCUA is pursuing claims, Wells Fargo neglected its statutory and contractual obligations to certificate holders, including the five corporate credit unions," NCUA Board Chairman Debbie Matz said in a statement. "This litigation is intended to hold Wells Fargo accountable for losses caused by that neglect."
According to the NCUA, five corporate credit unions purchased about $2.4 billion in residential mortgage-backed securities from those trusts between 2004 and 2007. Those securities were faulty and lost substantial value, contributing to the failure of all five credit unions, the NCUA said.
The NCUA said its complaint states that, despite knowing about defects in the mortgage loans, Wells Fargo failed to provide required notices to certificate holders and other parties and failed to take timely action to force the repurchase, substitution, or cure of defective mortgage loans or otherwise preserve trust remedies.
It’s not the first time the federal regulator has taken up the fight against a multibillion dollar financial institutions. Earlier this year, the NCUA also filed a suite of lawsuits against more than a dozen international banks, alleging their involvement in the sale of faulty securities and manipulation of the LIBOR hurt corporate credit unions in America.
The National Credit Union Administration recently filed suit in federal court against Wells Fargo Bank National Association, alleging the megabank failed in its duties as the trustee of 27 residential mortgage-backed securities trusts and, in so doing, violated state and federal law.
"Like other trustees against whom NCUA is pursuing claims, Wells Fargo neglected its statutory and contractual obligations to certificate holders, including the five corporate credit unions," NCUA Board Chairman Debbie Matz said in a statement. "This litigation is intended to hold Wells Fargo accountable for losses caused by that neglect."
According to the NCUA, five corporate credit unions purchased about $2.4 billion in residential mortgage-backed securities from those trusts between 2004 and 2007. Those securities were faulty and lost substantial value, contributing to the failure of all five credit unions, the NCUA said.
The NCUA said its complaint states that, despite knowing about defects in the mortgage loans, Wells Fargo failed to provide required notices to certificate holders and other parties and failed to take timely action to force the repurchase, substitution, or cure of defective mortgage loans or otherwise preserve trust remedies.
It’s not the first time the federal regulator has taken up the fight against a multibillion dollar financial institutions. Earlier this year, the NCUA also filed a suite of lawsuits against more than a dozen international banks, alleging their involvement in the sale of faulty securities and manipulation of the LIBOR hurt corporate credit unions in America.
