BlackRock And Pimco-Led Group Targets Wells Fargo Over Mortgage Securities
While Bank of America saw a steady decline in share price leading up to their agreement to pay the $8.5 billion dollar settlement, share prices popped once the agreement was reached. Could the same scenario be the case for Wells Fargo?
Houston lawyer Kathy Patrick has negotiated an $8.5 billion deal with Bank of America, the biggest legal settlement in Wall Street history, and publicly declared her intention of going after JPMorgan Chase & Co. Now, Patrick is targeting Wells Fargo & Co.
Patrick’s law firm, Gibbs and Bruns, on Thursday announced that the powerful group of bondholders that it represents, which includes BlackRock and Pimco, has issued instructions to the trustees of mortgage pools securing $19 billion of residential mortgage-backed securities issued by Wells Fargo and its affiliates. It is the second time the big investor group has formally identified a target since its landmark Bank of America settlement, which is currently being vigorously contested.
The instructions represent a first step in determining whether Wells Fargo included ineligible loans in the securities. “Our clients continue to seek a comprehensive solution to the problems of ineligible mortgages in RMBS pools and deficient servicing of those loans,” Patrick said in a statement. “Today’s action is another step toward achieving that goal.”
Last month Patrick issued a similar announcement, saying her clients were seeking a comprehensive solution over $95 billion of mortgage-backed securities issued by JPMorgan Chase. Chris Gamaitoni of Compass Point Research & Trading has estimated losses for JPMorgan of $5.4 billion if Patrick uses the same thinking that she used for the Bank of America deal.
By: Kathy Patrick
via BlackRock And Pimco-Led Group Targets Wells Fargo Over Mortgage Securities – Forbes.