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News Now

CU System
CMG Watterson sign agreement on RMBS due diligence documents
SEATTLE (12/14/12)--CUNA Mutual Group and Bellevue, Wash.-based Watterson Prime LLC have reached an agreement on CUNA Mutual's motion to compel Watterson to produce documents related to residential mortgage backed securities (RMBS) sold to the insurance company by RBS Securities before the nation's financial crisis hit.

The companies filed a notice Wednesday in the U.S. District Court for the Western District of Washington (Seattle) of voluntary dismissal, without prejudice to the defendant, of the motion to compel the documents.

The agreement came as the federal court in Seattle was preparing a proposed rulingfiled Nov. 30 that would have ordered Watterson Prime to turn over due diligence documents subpoenaed by CUNA Mutual for its lawsuit against RBS Securities.

The company's Sept. 17 subpoena had sought documents related to 15 RMBS at the center of CUNA Mutual's $72 million lawsuit against RBS, specifically nine types of documents related to the RMBS' underwriting, appraisal of, due diligence and more..

CUNA Mutual filed its lawsuit against RBS in a U.S. District Court in the Western District of Wisconsin (Madison) on Jan. 17. It seeks a rescission of its purchases, which it bought in 10 separate offerings. The purchases were based on representations made by RBS about the credit quality of the mortgage pools that collateralize the securities, CUNA Mutual said in its complaint. 

CUNA Mutual maintains that RBS falsely represented the products it sold between 2004 and 2007.

A key issue in the Wisconsin case is whether RBS engaged in proper due diligence regarding the mortgage loans underlying the certificates it sold, CUNA Mutual said in its motion to compel Watterson Prime to produce the documents. RBS identified several third party companies--such as Watterson Prime, the Clayton Group, and the Bohan Group--to perform due diligence review in the form of loan-level re-underwriting, it said.


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