Subprime mortgage lender NovaStar Mortgage, Deutsche Bank, Royal Bank of Scotland and Wells Fargo will pay a $165 million settlement in a class-action lawsuit that included the $28.5 billion Iowa Public Employees’ Retirement System, Des Moines, as a plaintiff.
The lawsuit, which was connected with losses from mortgage-backed securities issued by NovaStar prior to the financial crisis, was originally filed in 2008 by the New Jersey Carpenters Health Fund, Edison, N.J., and was settled in U.S. District Court in New York.
“After years of hard-fought litigation — which included a dismissal, an appeal and even the bankruptcy of some of the defendants — thousands of workers will finally get some financial relief,” said Steven J. Toll, managing partner at plaintiff representative Cohen Milstein Sellers & Toll, in a news release from the law firm. “We will continue to seek justice for those who suffered because of irresponsible lending and investments that burst the housing bubble and crashed our economy.”
Deutsche Bank, Royal Bank of Scotland and Wells Fargo were underwriters for NovaStar, which declared bankruptcy in 2016, and allegedly misled investors on how safe the securities were.Mr. Toll referred questions to the news release. Judy Akre, spokeswoman for the Iowa Public Employees’ Retirement System, said in an email she did not have a comment at this time. William Alderman, partner at Orrick, Herrington & Sutcliffe, the firm that represented NovaStar and individual defendants, could not be immediately reached to provide comment.