Articles Tagged with Bancorp

UBS (UBS) is on trial in Manhattan federal court. According to Reuters, the civil case was brought by UBS Bancorp (USB) for three trusts. The trusts claim that in their contract with the Swiss banking giant, UBS agreed that the mortgages backing the securities would satisfy certain standards. However, they contend, when it became clear the mortgages were faulty, UBS would not repurchase them. Now, the trusts want back the $2.1B that they lost.

UBS’s legal defense team argued that the lawyers of the trust are assessing the loans from the perspective of “hindsight bias.” They want U.S. District Judge Kevin Catel to evaluate whether when the loans were considered defective at the time that they were issued in 2006 and 2007.

According to the mortgage-backed securities lawsuit, over 17,000 loans were pooled into three trusts, which issued securities granting investors the right to borrower-made payments. The problem was, contend the plaintiffs, over 9,600 of the loans were defective, primarily because of borrower fraud or because they did not meet underwriting requirements. The trusts believe that UBS did not properly vet the loans, which it obtained through shady lenders that would go on to fail.

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