Wells Fargo Reaches Deal with ResCap over Toxic Mortgages
Wells Fargo & Co. has reached a settlement tied to bad real estate loans that officials at Residential Capital LLC claim helped push the subprime mortgage lender into bankruptcy, the Wall Street Journal reported on Saturday. The bank reached the agreement with the trust overseeing ResCap’s liquidation. The ResCap liquidating trust was established in late 2013 to seek compensation from mortgage underwriters that passed bad loans to the servicing firm in the years before its bankruptcy. ResCap, which built its business selling loans directly or bundling them into mortgage-backed securities for resale, became the target of crippling litigation and slid into chapter 11 when they later plunged in value. Although the terms of Wells Fargo’s deal weren't made public, the trust has now recovered just under $400 million through settlements. Read more. (Subscription required.) http://www.wsj.com/articles/wells-fargo-reaches-deal-with-rescap-over-t…
To read more about litigation or liquidation trusts in bankruptcy, be sure to pick up a copy of ABI’s A Practitioner's Guide to Liquidation and Litigation Trusts.
