Hedge Fund Sues RMBS Trustee Wells Fargo For Breaches

Law360, New York (March 8, 2012, 5:34 PM EST) -- Galena Street Fund LP sued Wells Fargo Bank NA in Colorado federal court on Wednesday for allegedly breaching its responsibilities as both a trustee and servicer for certain residential mortgage-backed securities, costing the hedge fund millions of dollars in losses.

When homeowners fail to make payments on the underlying loans for such securities, loan servicers can advance those payments to the securitized trusts and reimburse themselves from foreclosure and mortgage insurance proceeds. However, Washington Mutual Bank FA, the predecessor servicer for the residential mortgage-backed securities at...
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