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Statement Regarding PLRMBS Litigation (Updated)
June 10, 2010
Today the Federal Home Loan Bank of San Francisco (Bank) filed amended complaints in its actions in the Superior Court of California, County of San Francisco, against securities dealers in relation to certain of the Bank's investments in private-label residential mortgage-backed securities (PLRMBS). The Bank filed its original complaints on March 15, 2010.
The amended complaints add a tenth securities dealer (WaMu Capital Corp.), as a defendant.
In its amended complaints, the Bank is seeking to rescind its purchases of 136 securities in 116 securitization trusts, for which the Bank originally paid more than $19.5 billion.
The amended complaints reflect the Bank's further investigation of specific loans in the 116 trusts. The amended complaints allege, on a trust-by-trust basis, that the defendant dealers made untrue or misleading statements about the loan-to-value ratios of the mortgage loans in the trusts, the percentage of those loans that were secured by the primary residence of the borrower, and the extent to which the originators of those loans departed from their disclosed underwriting standards in making the loans.
All of the PLRMBS in the Bank's mortgage portfolio, including those identified in the complaints, were rated AAA when purchased, based on the information provided by the securities dealers. The Bank employs conservative criteria and guidelines for all its MBS investments. The Bank invests in high-quality financial instruments to facilitate its role as a cost-effective provider of credit and liquidity to its member financial institutions. These investments support the Bank's mission of promoting housing, homeownership, and community development by providing the Bank with greater financial flexibility in helping members meet the credit needs of their communities during all economic times and in funding the Bank's Affordable Housing Program and other programs that create affordable housing and promote community economic development.
In filing these complaints, the Bank seeks to continue supporting its mission and to protect the interests of its member shareholders, which include over 400 community banks, credit unions, and savings institutions headquartered in Arizona, California, and Nevada that serve millions of consumers.
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Statement Regarding PLRMBS Litigation (Updated)
June 10, 2010
Today the Federal Home Loan Bank of San Francisco (Bank) filed amended complaints in its actions in the Superior Court of California, County of San Francisco, against securities dealers in relation to certain of the Bank's investments in private-label residential mortgage-backed securities (PLRMBS). The Bank filed its original complaints on March 15, 2010.
The amended complaints add a tenth securities dealer (WaMu Capital Corp.), as a defendant.
In its amended complaints, the Bank is seeking to rescind its purchases of 136 securities in 116 securitization trusts, for which the Bank originally paid more than $19.5 billion.
The amended complaints reflect the Bank's further investigation of specific loans in the 116 trusts. The amended complaints allege, on a trust-by-trust basis, that the defendant dealers made untrue or misleading statements about the loan-to-value ratios of the mortgage loans in the trusts, the percentage of those loans that were secured by the primary residence of the borrower, and the extent to which the originators of those loans departed from their disclosed underwriting standards in making the loans.
All of the PLRMBS in the Bank's mortgage portfolio, including those identified in the complaints, were rated AAA when purchased, based on the information provided by the securities dealers. The Bank employs conservative criteria and guidelines for all its MBS investments. The Bank invests in high-quality financial instruments to facilitate its role as a cost-effective provider of credit and liquidity to its member financial institutions. These investments support the Bank's mission of promoting housing, homeownership, and community development by providing the Bank with greater financial flexibility in helping members meet the credit needs of their communities during all economic times and in funding the Bank's Affordable Housing Program and other programs that create affordable housing and promote community economic development.
In filing these complaints, the Bank seeks to continue supporting its mission and to protect the interests of its member shareholders, which include over 400 community banks, credit unions, and savings institutions headquartered in Arizona, California, and Nevada that serve millions of consumers.
© 2000-2010 Federal Home Loan Bank of San Francisco
