They're willing to dig into their pockets and do whatever is necessary for their clients.

- Kenneth Feinberg, special master, Sept. 11 Victim Compensation Committee

Federal Judge Preliminarily Approves $100 Million Partial RALI MBS Case Settlement

7/1/2013

Judge Harold Baer of the United States District Court in New York has granted preliminary approval of a partial $100 million settlement in the class action lawsuit brought by purchasers of mortgage backed securities (MBS) issued by Residential Accredit Loans, Inc. (RALI).  Lead Plaintiff New Jersey Carpenters Health Fund reached the settlement with RALI and others earlier this month, according to Plaintiffs Lead Counsel Cohen Milstein Sellers & Toll PLLC.

At issue is the sale of mortgage-backed securities to the New Jersey Carpenters Health Fund and other investors in 59 offerings from 2006 through 2007 that were issued and sold by RALI, certain of its affiliates, including Ally Securities, LLC. (Ally), and others.  Among Securities Act violations, the plaintiffs charged that the Prospectuses issued in connection with the RALI MBS that described the guidelines used to originate the mortgages supporting the MBS contained material misstatements and omissions since, in fact, those guidelines had been systematically disregarded. On May 14, 2012, RALI and affiliated defendants, Residential Capital, LLC, and Residential Funding, LLC, along with affiliated defendants Residential Financial, LLC, filed voluntary petitions seeking protection under Chapter 11 of the Bankruptcy Code.

The $100 million Settlement with the class plaintiffs will be funded as a result of payments made by Ally Financial Inc. as part of a global settlement in the RALI Chapter 11 bankruptcy case.  The  Settlement amount will be received and held in escrow for the benefit of the Class  upon final approval of the Settlement by Judge Baer and confirmation of the bankruptcy plan in the RALI Chapter 11 bankruptcy case.  The Settlement amount will be held in escrow until there is a resolution of the entire case.

"In view of the limited resources of these particular settling defendants and the obstacles confronting the class in this action with respect to them due, in part, to the RALI Chapter 11 Bankruptcy Case, the partial recovery of $100 million on behalf of investors will be an excellent result," said Plaintiffs’ Lead Counsel Joel Laitman, of Cohen Milstein Sellers & Toll PLLC.

Judge Baer will hold a final approval hearing on Oct. 7, 2013.  The settlement does not include the underwriter defendants Goldman, Sachs & Co., Citigroup Global Markets Inc., UBS Securities LLC and Deutsche Bank Securities, Inc. The action will continue against these defendants. 

For more information about the case, New Jersey Carpenters Health Fund, et al., v. Residential Capital, LLC, et al., Civ. No. 08-8781 (HB) (S.D.N.Y.), visit http://www.cohenmilstein.com/cases/233/rali-mbs-litigation.

Contact:
                        
Pam Avery
pam@turnerstrategies.com
402-305-0799