A federal judge has awarded the court-appointed trustee overseeing the liquidation of Thornburg Mortgage Inc. $45 million in his crisis-era lawsuit against Royal Bank of Canada, finding the bank shortchanged the mortgage lender when it seized and subsequently sold some of its assets, the Wall Street Journal reported on Saturday. U.S. District Judge George L. Russell III ruled on Wednesday in Baltimore that RBC Capital, the lender’s investment-banking arm, improperly sold the assets backing repurchase agreements the mortgage lender had used to fund its business. RBC seized the mortgage securities after Thornburg defaulted during the turmoil in the mortgage market in August 2007. In granting the Thornburg trustee’s motion for summary judgment, the judge said that RBC undervalued the seized mortgage-backed securities at issue by $26.3 million. With interest, Thornburg is owed $45 million in damages. Joel I. Sher, the bankruptcy trustee overseeing Thornburg’s liquidation, sued RBC Capital Markets in a breach-of-contract lawsuit over what he said were improper margin calls and the subsequent seizure and sale of $573 million in mortgage-backed securities Thornburg financed through RBC.
