Southern District Judge Harold Baer (See Profile) on Thursday refused to dismiss breach of contract claims brought by three trusts that issued about $1.5 billion in securities backed by UBS-sponsored mortgages. And, Baer ruled, in MASTR Adjustable Rate Mortgages Trust 2006-OA2 v. UBS Real Estate Securities, 12 Civ. 7322, UBS may have to pay money damages for failing to repurchase faulty loans. His ruling comes three months after UBS agreed to pay $358 million to settle parallel claims brought by Assured Guaranty, which issued insurance on the securitization deals.
Lawyers at Quinn Emanuel Urquhart & Sullivan sued UBS unit UBS Real Estate Securities Inc. on behalf of the trusts last September. They alleged UBS failed to police the quality of loans pooled into the three securitization trusts, which paved the way for about half the loans to wind up delinquent. When bond insurer Assured alerted UBS to the defective loans, the plaintiffs claimed, UBS shirked its contractual duty to buy them back.
