The banks knew the loans underlying trillions of dollars worth of residential mortgage-backed securities were misrepresented and failed to invoke their rights to force the sellers to buy them back or act against servicers, causing billions of dollars in losses, said copies of the complaints reviewed by Bloomberg News. The filings couldn't be immediately confirmed Wednesday in New York State Supreme Court in Manhattan.
Bank of New York Mellon “negligently failed to protect the trusts and certificate holders,” said a copy of the complaint against BNY Mellon. “BNYM and its responsible officers knew of pervasive, material breaches of originators' and RMBS sponsors' representations and warranties, and loan servicers' material breaches, yet did nothing to protect the trusts.”
Pools of home loans securitized into bonds were central to the housing bubble that helped send the U.S. into the worst recession since the 1930s. The housing market collapsed, and the market for the securities evaporated.
Ron Gruendl, a spokesman for BNY Mellon, and Renee Calabro, a spokeswoman for Deutsche Bank, declined to comment on the lawsuits. Juanita Gutierrez, a spokeswoman for HSBC Holdings, another defendant, also declined to comment on the claims.
A call to Citigroup public affairs after regular business hours Wednesday went unanswered. Teri Charest, a spokeswoman for U.S. Bancorp, and Oscar Suris, a spokesman for Wells Fargo & Co., didn't immediately respond to voice-mail messages seeking comment on the lawsuits against those companies.