SEATTLE, Wash., and MADISON, Wis. (11/29/12)--CUNA Mutual Group has asked a federal court in Seattle to help it obtain documents related to the underwriting of 15 residential mortgage-backed securities (RMBS) that are at the center of its lawsuit against RBS Securities Inc.
CUNA Mutual asked the Seattle court to enforce a subpoena against Bellevue, Wash.-based Watterson Prime LLC, one of the firms that provided due diligence information that corroborated to CUNA Mutual that the $72 million MBS pool it bought from RBS between 2004 and 2007 followed preapproved underwriting guidelines. Watterson, one of several third-party companies that performed due diligence on the securities, has denied all requests for the documents, CUNA Mutual confirmed to News Now.
The company filed its lawsuit against RBS in a U.S. District Court in the Western District of Wisconsin (Madison) on Jan. 17 as for rescission of its purchases. The suit alleges CUNA Mutual bought 15 RMBS in 10 separate offerings from RBS after RBS made representations about the credit quality of the mortgage pools collateralizing those securities, including representations about Loan-to-Value Ratios, CLTV ratios, owner occupancy rates, credit ratings and the originators' adherence to stated underwriting standards.
"Each of these representations was material to CUNA Mutual, because it was likely to and did induce a reasonable investor to purchase the certificates for the purchase price at the relevant yield," said the complaint filed. "Each of these representations was false at the time it was made," the company said, adding that had it known they were false it would not have purchased the certificates.
"This action continues to be an issue of righting a wrong and is being taken in the best interests of CUNA Mutual Group and its policyholders," said Phil Tschudy, media relations manager at CUNA Mutual Group. "RBS falsely represented products it sold us between 2004 and 2007 and, as a result, we are seeking recompense. Because this issue is in litigation, we cannot comment further on the lawsuit," he told News Now.