Second Circuit Agrees to Hear Interlocutory Appeal of Key MBS Litigation Questions

RMBS

On May 7, the U.S. Court of Appeals for the Second Circuit granted two petitions seeking interlocutory appeal of key questions related to pending mortgage backed securities (MBS) cases. Retirement Board of the Policemen's Annuity and Benefit Fund of the City of Chicago v. The Bank of New York Mellon, Nos. 13-00661, 00664 (2nd Cir. May 7, 2013). Taking the two appeals in tandem, the court will address (i) a group of pension funds’ question of whether a named plaintiff purchasing a certificate issued by one MBS trust has standing to represent a class which includes purchasers of certificates issued by trusts from which that plaintiff did not purchase, where the action is against a common trustee and involves repurchase rights for purportedly defective loans issued by a common originator, and (ii) an MBS trustee’s question as to whether certificates evidencing beneficial ownership interests in trusts holding multiple mortgage loans are subject to the Trust Indenture Act.