From: Reuters
By Jonathan Stempel
(Reuters) - A federal judge rejected Bank of New York Mellon Corp's
bid to dismiss a lawsuit by investors over its role as trustee for
mortgage-backed securities that led to an $8.5 billion settlement by
Bank of America Corp.
U.S. District Judge William Pauley in Manhattan said on Tuesday that
bondholders who invested in 26 trusts alleged to have contained risky
mortgage loans from the former Countrywide Financial Corp may pursue
claims against Bank of New York Mellon. He dismissed a variety of other
claims.
The decision relates to a lawsuit challenging Bank of New York
Mellon's performance of its day-to-day obligations as a trustee, which
includes ensuring that underlying home loans are properly documented and
that bondholders' rights are protected.
Beth Kaswan, a lawyer for four pension funds in Chicago, Michigan and
Pennsylvania that brought the case, said the decision leaves intact
claims over securities backed by more than $30 billion of loans, and
which have suffered more than $9 billion of losses or delinquencies.
She said she believes the decision is the first to let investors in
mortgage-backed securities pursue claims against a trustee under the
1939 federal Trust Indenture Act.
"The decision is a watershed," Kaswan said.
Kevin Heine, a spokesman for Bank of New York Mellon, said the
company was pleased that the court narrowed the issues to be considered
and removed the vast majority of trusts from the suit. "We respectfully
disagree with ruling's application of the Trust Indenture Act to
non-indenture securitizations and will continue to defend against those
claims," he said. MORE
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