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Amanda R. Lawrence quoted in Inside Mortgage Finance article, “Court says owner trustees not liable for RMBS losses”

Inside Mortgage Finance

Amanda R. Lawrence was quoted on May 30, 2019 in an Inside Mortgage Finance article, “Court says owner trustees not liable for RMBS losses,” which discussed a European commercial bank that went into liquidation, and the bank’s lawsuit of a trust company alleging that the company failed to protect the bank from widespread loan defaults. The article stated, “A Third Circuit appeals panel last week held that owner trustees are not responsible for residential MBS losses given their ‘primarily ministerial’ role under governing contracts. Attorneys said the ruling is not surprising given the limited duty mandated by the contract for an owner trustee. Typically, most trustees that have been caught up in RMBS litigation are indenture trustees. It is noteworthy that the suit involves securities issued more than 10 years ago, before the financial crisis. Many Wall Street banks have been caught up in RMBS litigation stemming from the financial crisis, many of which are still being resolved.”

Lawrence noted that she expects the number of such suits to decline because many will be hitting the statute of limitations for breach of contracts in many states. "That likely will determine whether or not there are other people to go after, and what, if any, claims could be made against them, because of the age of the agreements now. I would expect that we would not see a lot more of these larger claims against entities that were involved in the securitizations given the age of the agreements and the loans. On the other hand, while it will be difficult to bring breach of contract claims given the age of the agreements at issue, plaintiffs have shifted to bringing indemnification claims as in many states the statute of limitations does not begin to run until the amount of the loss, damage, or liability is fixed.”

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