Press Release | Royal Park Investments Seeks More Than $3 Billion in Investment-Bank Lawsuit Against Major Banks arising from Fortis Bank's purchases of US MBS, Securitized


Royal Park Investments Seeks More Than $3 Billion in Investment-Bank Lawsuit Against Major Banks Arising from Fortis Bank’s Purchases of US MBS, Securitized

Royal Park Investments Seeks More Than $3 Billion in Investment-Bank Lawsuit Against Major Banks Arising from Fortis Bank’s Purchases of US MBS, Securitized

Press Release

Royal Park Investments SA/NV starts a lawsuit against several investment banks in an action for damages arising from Fortis Bank’s purchases of US residential mortgage-backed securities, securitized and/or sold by those investments banks

Brussels, December 21st, 2012

Royal Park Investments SA/NV (“RPI”) is the plaintiff in an action pending in New York state court
against the following investment banks (the “defendants”): JP Morgan, Deutsche Bank, Goldman
Sachs, Credit Suisse, Royal Bank of Scotland, Merrill Lynch, Morgan Stanley, Bank of America,
Barclays, CitiGroup and UBS, alleging that the those defendants made negligent and fraudulent
misrepresentations and omissions in offering documents used to sell hundreds of residential
mortgage-backed securities (“US RMBS”). RPI is suing as the assignee of several Fortis Bank
entities, the original purchasers of the RMBS. The special purpose and mission statement of RPI is to
minimize the downside risk and maximize recoveries on its legacy portfolio.

A complaint was filed and served on December 14th, 2012. RPI alleges that, in the offering
documents, defendants misrepresented: (1) the underwriting guidelines used to originate the
mortgage loans underlying the RMBS; (2) the loan-to-value (“LTV”) ratios of such loans; (3) the owner
occupancy rates (“OOR”) of the loans; (4) that title to the loans was properly and timely transferred;
and (5) the credit ratings assigned to the RMBS. RPI claims damages in excess of USD 3 billion.

RPI’s lawsuit alleges that defendants negligently and fraudulently represented in the offering
documents that the loans underlying the RMBS were originated pursuant to certain prudent
underwriting guidelines designed to assess the borrowers’ ability and willingness to repay the loans,
and the adequacy of the underlying properties as collateral for the loans. The action alleges these
representations were false and misleading because defendants knew and concealed that the loan
originators had abandoned their underwriting guidelines and instead were making loans to anyone
they could, regardless of their repayment ability. Many loans were made to borrowers who either
could not afford to repay them or never intended to repay them. The lawsuit also alleges that
defendants knew and concealed that originators were using falsely inflated appraisals of the
underlying properties and therefore they were not evaluating whether the values of the properties were
sufficient security for the loans.

The lawsuit further alleges that the LTV ratios stated in the offering documents were false and
misleading because loan originators were using inflated appraisals, which caused the LTV ratios
stated in the offering documents to be misleadingly understated. This created the false impression
that the loans were safer and much less risky than represented.

In addition, the lawsuit alleges that defendants falsely overstated the OOR in the offering documents.
The lawsuit alleges that defendants knew that borrowers and originators were misrepresenting that the
borrowers intended to occupy the properties when in fact the borrowers were not intending to and did
not occupy the properties as their primary residences. This had the effect of making the loans appear
safer and less risky than was true. Notwithstanding this knowledge, defendants reported the false and
inflated OOR.

RPI’s lawsuit alleges that defendants did not properly or timely transfer title to the loans to the trusts
issuing the RMBS, contrary to defendants’ representations in the offering documents.
The lawsuit also alleges that defendants supplied the credit ratings agencies with false data about the
loans, including the misrepresented information described above, which resulted in the credit agencies
giving the RMBS “investment grade” credit ratings that they should not have received. The action
alleges defendants were well aware of this but did not correct the misstatements.

Finally, RPI’s lawsuit also alleges that several of the defendant banks, knowing that the US RMBS
they sold were terrible investments, concealed that they were selling such securities “short” at the
same time they sold them to RPI’s assignors, while simultaneously representing that such securities
were safe ‘investment grade’ securities.

After defendants made the misrepresentations above, and which induced RPI’s assignors to purchase
the RMBS, the loans underlying the RMBS began to default at extremely high rates. As a result, the
credit ratings agencies downgraded the RMBS from “investment grade” securities, to “junk” bond
status or worse. Many of the RMBS are now in default and have suffered write-downs, causing
billions of dollars in damages to RPI. RPI has instituted this lawsuit to recover those damages caused
by defendants’ misrepresentations and omissions.

About RPI
RPI was created by Ageas (former Fortis Holding), the Belgian State acting through SFPI/FPIM and
BNP Paribas for the purpose of acquiring a portion of the structured credits portfolio of ex-Fortis Bank.
RPI was incorporated on 20 November 2008. The portfolio was acquired on 12 May 2009, for a
purchase price of EUR 11,7 billion. The corresponding face value of the portfolio amounted to EUR
20,5 billion. Despite different challenges, RPI managed to post stable financial results, with a gross
result of EUR 264 million during the first 3 quarters of 2012. During the first 3 quarters of 2012 RPI,
which was set up as a defeasance structure, continued to work out the portfolio. At the end of
September 2012 the company had EUR 12,6 billion assets under management. The Net Book Value
(Economic Recovery Value) of these assets was EUR 8,1 billion, down from EUR 9,1 billion at the end
of 2011. EUR 4,9 billion of debt remained outstanding, down from EUR 6,1 billion. The addition of
profits to the retained earnings (in total EUR 857 million) has also strengthened the net worth of the
company to EUR 2,6 billion.
(end of Press Release)

* * *

For additional information, please contact:
Danny Frans: +32 2 221 03 41 or +32 494 56 72 36
Jacques Straetmans: +32 2 221 03 42 or +32 470 99 17 19

[ipaper docId=118010615 access_key=key-c976p3cgshbumwq1isk height=600 width=600 /]

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4 Responses to “Royal Park Investments Seeks More Than $3 Billion in Investment-Bank Lawsuit Against Major Banks Arising from Fortis Bank’s Purchases of US MBS, Securitized”

  1. Have you noticed almost every show on TV mentions the slow economy and foreclosures in the show itself? Like it is common and part of life now.? With the government giving permission to Freddie and Fannie lawbreakers, I allege them to be law breakers themselves and criminals of the worst kind, to raise interest rates on homeowners underwater and still hanging on paying their inflated falsely appraised houses, this crime will be evident to more and more homeowners becoming homeless. That are not even on the books yet as being alleged defaulters. It is becoming apparent our government officials are acting on behalf ot the greedy rich and powerful to steal all property. Just as the government intended the HAMP program to help the banks and never intended to help the homeowenrs and even lured unsuspecting homeowners into alleged default and foreclosure by telling people to get behind inorder to steal property not in default. People need to wake up and stop this crime. Or they will be the next ones on the default jobless list. And when the last one falls there will be no one to protect them either. The homes are being stolen in waves to keep the people from seeing the evil and the crime until they are the next on the list of jobless or incomeless. I now have a waive of new customers telling me they are laying off employees for the first time in forthy years. Customers whom told me they could not figure out why people cliamed there are no decent jobs, they were busy, now coming to me telling me they are worried! There is no work out there. I believe this is by design to sieze all property and wealth. Find good attorneys and call and email and write your represenatives and vote out the evil. Call for judges to be disbarred and debenched if they are ruling by the rule of bank law and not the rule of law. Take the time to go to the court proceedures agaisnt homeowners and become knowledgable on what is happening to the American dream and why. Call for prosecution of the banksters and enablers.


    RPI I hope they destroy the defendants.I have been at this for over 5 years.I have lived here for free for 5.5 years due to mortgage fraud,and suing the banks [Pro Se]they really hate it, when an asshole with a big mouth [me] outsmarts them,which I have.
    It is really simple=cheat and you will pay=Karma.


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