COMPLAINT | Federal Deposit Insurance Corporation v. U.S. Bank NA | breaches of two securitization trusts totaling more than $248 million

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Federal Deposit Insurance Corporation v. U.S. Bank NA | breaches of two securitization trusts totaling more than $248 million

Federal Deposit Insurance Corporation v. U.S. Bank NA | breaches of two securitization trusts totaling more than $248 million

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK

FEDERAL DEPOSIT INSURANCE CORPORATION
AS RECEIVER FOR GUARANTY BANK
Plaintiff,

-against-

U.S. BANK NATIONAL ASSOCIATION,
Defendant

NATURE OF ACTION

1. This is an action for damages against US Bank for its breaches of contractual and
statutory duties under the governing agreements, the New York Streit Act, N.Y. Real Property
Law § 124, et seq. (the “Streit Act”), and under the federal Trust Indenture Act of 1939 (the
“TIA”), 15 U.S.C. § 77aaa, et seq.1 as Trustee for two securitization trusts, Harborview
Mortgage Loan Trust, Pass-Through Certificates, Series 2005-8 (“HVMLT 2005-8”) and
Harborview Mortgage Loan Trust, Pass-Through Certificates, Series 2005-16 (“HVMLT
2005-16”) ( collectively the “Covered Trusts”), which issued residential mortgage-backed
securities (“RMBS”) purchased by investors, including Guaranty Bank (“Guaranty”).

2. This action seeks to hold US Bank accountable for abdicating its fundamental
duties as the trustee to certificateholders such as Plaintiff. Under the agreements governing the
Covered Trusts, US Bank accepted virtually all of the powers designed to protect the
certificateholders and was compensated for that role. US Bank was essentially Plaintiff’s sole
source of protection against breaches of the governing agreements by the other parties to those
agreements, including the sponsor that sold the loans to the Covered Trusts and the servicer
tasked with servicing the mortgage loans. US Bank, however, shirked its duty to exercise its
powers to protect Plaintiff and instead attempted to shorn itself of the responsibilities that
trusteeship imports. While US Bank stood idly for years, the sponsor kept defective mortgage
loans in the Covered Trusts, the servicer reaped excessive fees for servicing the defaulted loans
from the Covered Trusts, and Plaintiff was left to suffer enormous losses.

3. The Covered Trusts were created to facilitate RMBS transactions sold to
investors in 2005. Both of the RMBS transactions were sponsored by Greenwich Capital
Financial Products, Inc. (referred to herein as the “Sponsor”), and contained loans originated
by Countrywide Home Loans, Inc. (“Countrywide” or the “Originator”).

4. Prior to its failure, Guaranty purchased the RMBS certificates at issue in this
action with a purchase price of over $248 million (the “Certificates”)

[…]

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One Response to “Federal Deposit Insurance Corporation v. U.S. Bank NA | breaches of two securitization trusts totaling more than $248 million”

  1. Stupendous Man - Defender of Liberty, Foe of Tyranny says:

    Looks like the FDIC is … pissed off.

    🙂

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