Bank of New York Mellon must face a lawsuit seeking to hold it liable for causing $1.12bn of investor losses by failing to properly monitor five trusts backed by toxic residential mortgages, a Manhattan federal judge ruled.
Reuters reports that U.S. District Judge Gregory Woods said Belgium's Royal Park Investments SA/NV may pursue claims that the bank, as trustee for trusts dating from 2005 to 2007, ignored widespread, systemic abuse in how the underlying loans were underwritten and serviced, and failed to require that bad loans be repurchased.
"Indeed," Woods wrote in his decision on Wednesday, "it would be implausible to assume that somehow all of the mortgage loans underlying the trusts miraculously avoided the pervasive practices of the industry at the time."
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