HSBC Holdings Plc (HSBA.L) was on Monday ordered to face three U.S. lawsuits accusing it of breaching its duties as a trustee overseeing residential mortgage-backed securities that suffered more than $34 billion of losses in the global financial crisis.
U.S. District Judge Shira Scheindlin in Manhattan said the plaintiff investors, including funds from BlackRock Inc (BLK.N), Allianz SE’s (ALVG.DE) Pacific Investment Management Co and TIAA-CREF, could pursue claims accusing HSBC of breach of contract, and concealing known defects in mortgage loans backing 283 trusts.
“Based on plaintiffs’ detailed allegations, it is indeed plausible to infer that HSBC had actual knowledge of breaches in representations and warranties in the specific loans at issue,” Scheindlin wrote in a 53-page decision. “How HSBC gained this actual knowledge, or whether in fact it had actual knowledge, may be determined through discovery.”
The judge also said the plaintiffs could pursue a conflict of interest claim accusing HSBC of refusing to “rat out” misconduct by loan servicers, hoping that they would “return the favour when the roles were reversed.”
South Carolina litigation that targets banks and their mortgage registration system in the wake of the financial collapse of 2008 will advance.
A Bluffton law firm representing five counties, including Beaufort and Jasper, announced an initial victory on Friday over Mortgage Electronic Registration Systems, the national electronic registry and its member banks.
A judge in the S.C. Business Court has denied the request by MERS and the bank defendants to dismiss the counties’ claims. Without the Judge R. Lawton McIntosh’s determination, the cases would have ceased.
“Judge McIntosh’s order denying the motions to dismiss the issues raised by the counties was an early but essential hurdle we had to cross with the real battles to come in the future as we continue to press our claims against MERS and its member banks,” said Jim Scheider, one of the lead attorneys for the counties. Hampton, Collation and Allendale are the other three counties. The five individual cases had been consolidated for the hearing before Judge McIntosh.
I note for the Court’s benefit that a transfer to the Trust on June 11, 2009 is a legal impossibility for a number of reasons. I cannot conclude that this particular mortgage loan was ever owned by any of the parties. It is my opinion that this Trust does not own this mortgage loan. (This is why the banks do not want us questioning the trusts.)
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