Deutsche Bank fails to end BlackRock, Pimco mortgage debt lawsuit

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By Jonathan Stempel

<span class="articleLocation”>A U.S. judge on Monday narrowed but refused to
dismiss a lawsuit seeking to hold Deutsche Bank AG liable to investors, including dozens of portfolios from
BlackRock Inc and Pacific Investment Management Co, for
losses on poorly underwritten residential mortgage-backed
securities.

The proposed class-action lawsuit sought to recover “significant monetary damages” arising from Deutsche Bank’s
alleged “failure to discharge its essential duties” as trustee
of 62 trusts created between 2004 and 2008, and which issued
notes backed by about $90.3 billion of home loans.

In a docket entry, U.S. District Judge Jesse Furman in
Manhattan granted Deutsche Bank’s bid to dismiss
conflict-of-interest claims but denied its request to dismiss
representations-and-warranties, servicer-notification and
event-of-default claims.

The judge said he would explain his reasoning at a Feb. 2
hearing and consider additional claims he has yet to decide.

Deutsche Bank did not immediately respond to requests for
comment. According to their amended complaint, the plaintiffs
own more than $2.6 billion of notes issued by the 62 trusts.

Furman took over the case in June from U.S. District Judge
Richard Berman, who had dismissed other claims last January.
Among the other plaintiffs are funds run by Prudential
Investments, court records show.

The lawsuit is one of many accusing bond trustees such as
Deutsche Bank of shirking their responsibilities, including
notifying lenders of loan defects and telling investors when
defaults occur.

It is separate from Deutsche Bank’s completion last week of a $7.2 billion settlement with the U.S. Department of Justice
over its sale of defective mortgage securities prior to the 2008
financial crisis.

The case is BlackRock Core Bond Portfolio et al v Deutsche
Bank National Trust Co et al, U.S. District Court, Southern
District of New York, No. 14-09367.



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