A federal judge on Monday rejected a motion by two former WaMu
(Washington Mutual Bank) subsidiaries to escape a class action lawsuit
alleging Securities Act violations filed by plaintiffs who purchased
mortgage-backed certificates from the savings and loan that in 2008
became before the nation’s largest bank failure. The decision paves the
way for a Sept. 17, 2012, trial date, according to plaintiffs’ co-lead
counsel Steven Toll of Cohen Milstein Sellers & Toll PLLC.
“This is a terrific decision for the plaintiffs. The case is prepared
and we are looking forward to trial,” said Toll, whose firm along with
Scott + Scott LLP, represent the Boilermakers National Annuity Trust,
Doral Bank Puerto Rico, and the Policemen’s Annuity and Benefit Fund of
Chicago.
The case involves substantial claims in mortgage-backed certificates
issued and underwritten by WaMu and its related entities. The value of
the certificates, which were supported by pools of residential mortgage
loans, collapsed soon after issuance. The named plaintiffs, representing
a court-certified class of investors, allege that loans backing the
securities were “fundamentally impaired” and that they were misled as to
the quality of the loans’ underwriting.
In denying the defendant’s motion for summary judgment, which sought to
dismiss the plaintiffs’ claims before trial, Judge Marsha J. Pechman of
the U.S. District Court for the Western District of Washington, in
Seattle, wrote, “Plaintiffs have successfully raised a dispute of fact
as to whether WaMu systematically deviated from its underwriting
guidelines so as to render the statements in the offering documents
false or misleading.”
Furthermore, she added, “Plaintiffs have also shown a dispute of fact as
to whether the disclosures regarding exceptions were accurately reported
to investors.”
Judge Pechman also rejected the defendant’s argument that losses claimed
were caused entirely by something other than the disregard for WaMu’s
loan underwriting guidelines, and upheld the plaintiffs’ right to
include expert testimony from a highly regarded statistician and a loan
underwriting expert, as well as from several former WaMu employees whose
testimony would be helpful to the plaintiffs’ claims.
Additional information about the case and a copy of the court order
(Case NO. C09-37MJP) are available online at http://www.cohenmilstein.com/news.php?NewsID=516.
Editor’s Note: Interviews and copy of Federal
order available
