Reuters is reporting that UBS AG has agreed to pay $33 million to resolve claims that it sold toxic mortgage-backed securities (MBS) to two corporate credit unions that later failed.
The lawsuit dealt with MBS underwritten and sold by UBS to Southwest Corporate Federal Credit Union and Members United Corporate Federal Credit Union.
The National Credit Union Administration (NCUA) alleged that the securities' offering documents contained untrue statements that the loans were originated in accordance with underwriting guidelines
The deal, disclosed in a filing in Manhattan federal court, will settle one of several lawsuits by NCUA over the sale of mortgage-backed securities before the 2008 financial crisis.
The deal boosts to nearly $2.46 billion the amount the NCUA has recovered from banks through lawsuits it began filing in 2011.
The court filing would not have any effect on a separate lawsuit by the NCUA against UBS pending in Kansas.
In related news, U.S. District Judge Katherine Forrest in Manhattan rejected claims by NCUA that the banks failed in their roles as trustees for 98 residential mortgage-backed securities trusts.
Forrest said the NCUA lacked standing to sue over 89 trusts because the right to sue had been previously assigned, leaving the regulator with only an interest in payment streams.
The judge also dismissed claims that the banks breached their fiduciary duties or acted in bad faith with the other nine trusts. The only surviving claims are those of breach of contract on the nine trusts, which the banks did not seek to dismiss.
Read the Reuters' article.
Read article on Judge Forrest's decision.
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