DB Structured Products, a unit of Deutsche Bank, was accused in a lawsuit of selling a a 'massive number' of defective loans to a securitization trust.
Bloomberg reports that HSBC Bank USA NA, acting as trustee, asked in a federal lawsuit filed Wednesday in New York that DB Structured Products be ordered to pay unspecified money damages or to buy back the suspect loans, which were collateral for certificates issued by the trust.
At least 1,302 of more than 4,000 loans securitized and sold to the trust breached the bank unit’s warranties about their origination, the trustee said in the complaint. DB Structured Products also allegedly broke a promise to repurchase bad loans.
'DBSP’s breaches go to the very heart of the relevant agreements', according to the breach of contract claim brought by HSBC on behalf of Ace Securities Corp Home Equity Loan Trust Series 2007-WM2, a trust created under New York law in 2007.
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