Judge throws out FHFA suit against big bank

by Ryan Smith14 Apr 2014
A state supreme court judge has thrown out a lawsuit filed against Deutsche Bank by the Federal Housing Finance Agency.

The lawsuit sought to force the lender to cover losses incurred by Freddie Mac on home loans in a $1.4 billion trust, according to a Reuters report.

The FHFA accused Deutsche Bank of misrepresenting the quality of the loans backing securities in the trust, which dates from 2006. Freddie bought almost a third of those loans, the value of which plummeted during the housing meltdown.

But New York state suprome court Justice Eileen Branstein ruled that the lawsuit was barred by the state's six-year statute of limitations, Reuters reported. FHFA filed the lawsuit in 2012, which was within the statute of limitations, but the agency did not have standing to sue. The trustee overseeing the securities, HSBC Bank, had the required standing but did not join the lawsuit until after the statutory time limit had expired, Branstein ruled.

Branstein ruled that another HSBC suit against Deutsche Bank, involving a $702 million securities trust, could go forward.

In December, the lender agreed to pay $1.9 billion in order to settle claims that it misled Fannie and Freddie regarding the stability of $14.2 billion in mortgage-backed securites, Reuters reported.

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