The RMBS Settlements Just Keep on Coming

With the housing crisis well over seven years old, the mortgage-backed securities settlements continue to pile up.

With the recently announced agreement of Swiss-based bank Credit Suisse that it would pay $29 million to the National Credit Union Administration (NCUA) for selling toxic mortgage-backed securities, the total amount recovered by the NCUA in such cases swept past the $2.5 billion mark, according to NCUA.

The NCUA originally filed a lawsuit in 2013 to reclaim losses incurred by Members United and Southwest Corporate credit unions from the purchase of residential mortgage-backed securities from Credit Suisse, according to NCUA. According to a report from Reuters, subject of the lawsuit was a bundle of RMBS sold by Credit Suisse to Members United and Southwest Corporate for $228.8 million during 2006 and 2007. NCUA alleged that the offering documents of the securities contained misrepresented the securities by claiming that they met underwriting guidelines.

​“NCUA will continue to meet its statutory obligation to secure recoveries for credit unions and ensure consumers remain protected,” NCUA Board Chairman Debbie Matz said. “We will continue to aggressively pursue recoveries against Wall Street firms that contributed to the corporate crisis with the goals of minimizing net losses of the corporate crisis and providing a future rebate to credit unions.”

Credit Suisse had no comment on the settlement when contacted by DS News.

There may be more settlements coming. NCUA has litigation pending against Credit Suisse in a federal court in Kansas over the sales of toxic RMBS to U.S. Central and Southwest Corporate credit unions. In addition to the litigation in Kansas, NCUA has litigation pending against several other firms over the sales of faulty RMBS sales, and also has similar litigation pending against various RMBS trustees and LIBOR banks. According to the NCUA, the Administration was the first federal financial institutions regulator to recover losses from investments in RBMS on behalf of financial institutions that failed.