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NCUA Sues National Bank

November 14, 2014

On November 10, the NCUA announced the filing of a complaint against a large national bank for its alleged failure to fulfill its duties as a trustee for 121 residential mortgage-backed securities trusts. The NCUA claimed that the bank failed to comply with state and federal laws – Trust Indenture Act of 1939, and the Streit Act – establishing the trustee’s duties to trust beneficiaries. Specifically, NCUA accused the bank of not notifying corporate credit unions of defects in their mortgage loans, which prevented the repurchase, substitution, or cure of defective mortgage loans. NCUA further alleged that the bank’s lack of action contributed to the failure of the credit unions.