Federal Court Grants in Part UBS and JP Morgan Motions to Dismiss RMBS Suits

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On September 3, Judge John W. Lungstrum of the United States District Court for the District of Kansas granted in part and denied in part motions to dismiss by UBS Securities LLC and JP Morgan Securities LLC in four separate actions brought by the National Credit Union Administration (NCUA), as liquidator of certain failed credit unions. In each action, NCUA alleged that the defendants made misrepresentations and omissions in RMBS offering documents concerning, among other things, the loan-to-value ratios of the underlying loans and the underwriting guidelines used to originate those loans. In the action against UBS, the Court dismissed claims as to 10 of the 22 certificates at issue as time barred, ruling that the federal Extender Statute may not be extended by a tolling agreement. Order. In the action against JP Morgan, the Court granted the motion to dismiss with leave to amend as to two certificates backed by loans originated by entities as to which NCUA had failed to make any allegations. Order. In the action against JP Morgan as successor to Washington Mutual, the Court dismissed claims as to 31 of the 49 certificates at issue as time barred, also due to the inability of the Extender Statute to be extended by tolling agreement. The court rejected, however, JP Morgan’s argument that NCUA was required to exhaust its claims administratively through the FDIC, as receiver for WaMu, prior to filing suit, holding that the claims could not have been brought administratively against the FDIC because JP Morgan had assumed WaMu’s liabilities. Order. Finally, in the action against JP Morgan as successor to Bear Stearns, the Court dismissed claims as to 37 of the 83 certificates at issue as time barred, also due to the inability of the Extender Statute to be extended by tolling agreement. The Court rejected, however, JP Morgan’s statute of limitations-based arguments concerning the remaining certificates. Order.