KABOOM | Bank of NY Mellon Must Face Lawsuit on Countrywide
Bank of NY Mellon must face lawsuit on Countrywide
April 3 (Reuters) – A federal judge rejected Bank of New York Mellon Corp’s bid to dismiss a lawsuit by investors over its role as trustee for mortgage-backed securities that led to an $8.5 billion settlement by Bank of America Corp.
U.S. District Judge William Pauley in Manhattan said on Tuesday that bondholders who invested in 26 trusts alleged to have contained risky mortgage loans from the former Countrywide Financial Corp may pursue claims against Bank of New York Mellon. He dismissed a variety of other claims.
The decision relates to a lawsuit challenging Bank of New York Mellon’s performance of its day-to-day obligations as a trustee, which includes ensuring that underlying home loans are properly documented and that bondholders’ rights are protected.
Beth Kaswan, a lawyer for four pension funds in Chicago, Michigan and Pennsylvania that brought the case, said the decision leaves intact claims over securities backed by more than $30 billion of loans, and which have suffered more than $9 billion of losses or delinquencies.
She said she believes the decision is the first to let investors in mortgage-backed securities pursue claims against a trustee under the 1939 federal Trust Indenture Act.
Copy of the ruling below…