ALEXANDRIA, Va. (Nov. 10, 2014) – The National Credit Union Administration has filed suit in federal court against Deutsche Bank National Trust Company, alleging the bank violated state and federal laws by failing to fulfill its duties as trustee for 121 residential mortgage-backed securities trusts.
NCUA’s complaint is available online here. The agency’s suit seeks damages to be determined at trial.
Five corporate credit unions—U.S Central, WesCorp, Members United, Southwest and Constitution—purchased $140 billion in residential mortgage-backed securities issued from the trusts between 2004 and 2007. Those securities lost value, contributing to the failure of all five corporates.
“Trustees have the basic duty to protect, and Deutsche Bank National Trust Company failed to comply with the duties imposed by federal and state law,” NCUA Board Chairman Debbie Matz said. “This failure harmed trust beneficiaries, including the corporate credit unions. NCUA will do all it can to pursue appropriate remedies and recoup the losses suffered by the credit union system.”
NCUA’s complaint states the value of the securities depended on the quality of the pooled mortgage loans the trusts contained, and the bank, as trustee, had contractual and statutory duties to protect the interests of certificate holders. The complaint states that, despite knowing about defects in the mortgage loans, Deutsche Bank National Trust Company failed to provide required notices to certificate holders and other parties and failed to take timely action to force the repurchase, substitution, or cure of defective mortgage loans or otherwise preserve trust remedies.
NCUA is the independent federal agency created by the U.S. Congress to regulate, charter and supervise federal credit unions. With the backing of the full faith and credit of the United States, NCUA operates and manages the National Credit Union Share
Insurance Fund, insuring the deposits of account holders in all federal credit unions and the overwhelming majority of
state-chartered credit unions. At MyCreditUnion.gov, NCUA also educates the public on consumer protection and financial literacy issues.