Wells Fargo mostly defeats two lawsuits over mortgage losses

WELLS Fargo & Co on Tuesday won the dismissal of one lawsuit and much of a second accusing the fourth-largest bank of failing to monitor toxic mortgage-backed securities that were a major cause of the 2008 global financial crisis.

In a 68-page decision, US District Judge Katherine Polk Failla in Manhattan dismissed a lawsuit by investors led by Ireland's Phoenix Light SF, saying legal issues that they raised had been resolved in earlier litigation.

The judge also said Commerzbank AG was barred from pursuing many claims against San Francisco-based Wells Fargo because the German lender lacked standing or sued too late.

Commerzbank was allowed to sue over Wells Fargo's alleged failure to act upon learning that servicers for 17 trusts had liquidated 3,377 loans with defective documentation instead of having sellers repurchase them.

Some other claims also survived. Lawyers for the plaintiffs did not immediately respond to requests for comment.

Wells Fargo did not immediately respond to similar requests. The lawsuits sought hundreds of millions of dollars in damages over Wells Fargo's role as a loan trustee.

They are part of a slew of litigation over the last decade-and-a-half seeking to hold lenders and trustees liable for the plunging value of residential mortgage-backed securities once considered safe.

Litigation against trustees typically accused them of failing to require sellers to buy back soured loans, notify investors of defaults, and use appropriate standards of care.

Wells Fargo previously settled two investor class actions and a lawsuit by the National Credit Union Administration over defective mortgages.

In August 2018, it agreed to pay a US$2.09 billion civil fine to settle US Department of Justice claims it knowingly made and sold residential mortgage loans that misstated income information and were lower quality than it had represented. REUTERS

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