National Credit Union Administration Board v. UBS Securities, LLC

Filing 115

OPINION & ORDER 104413. Defendant's May 5,2 014 motion to dismiss is granted as to the Securities Act claims only. (Signed by Judge Denise L. Cote on 6/10/2014) (gr) Modified on 6/11/2014 (nt).

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
------------------------------------------X
:
:
NATIONAL CREDIT UNION ADMINISTRATION
BOARD, as Liquidating Agent of
:
:
Southwest Corporate Federal Credit
:
Union and Members United Corporate
Federal Credit Union,
:
:
:
Plaintiff,
:
-v:
UBS SECURITIES, LLC,
:
:
:
Defendant.
:
------------------------------------------X

13 Civ. 6731 (DLC)
OPINION & ORDER

APPEARANCES:
For the Plaintiff:
David C. Frederick, Wan J. Kim, Gregory G. Rapawy, and Andrew C.
Shen
Kellogg, Huber, Hansen, Todd, Evans & Figel, P.L.L.C.
Sumner Square, 1615 M Street, N.W., Suite 400
Washington, DC 20036
David H. Wollmuth, Fredrick R. Kessler, Steven S. Fitzgerald,
and Ryan A. Kane
Wollmuth Maher & Deutsch LLP
500 Fifth Avenue, 12th Floor
New York, NY 10010
George A. Zelcs
Korein Tillery LLC
205 North Michigan Avenue, Suite 1950
Chicago, IL 60601
Stephen M. Tillery, Greg G. Gutzler, Peter H. Rachman, and
Robert L. King
Korein Tillery LLC
505 North Seventh Street, Suite 3600
St. Louis, MO 63101

For the Defendant:
Jay B. Kasner, Scott D. Musoff, and Gary J. Hacker
Skadden, Arps, Slate, Meagher & Flom LLP
Four Times Square
New York, NY 10036

DENISE COTE, District Judge:
This Opinion addresses a narrow motion to dismiss filed in
one of seven actions brought in this district by the National
Credit Union Administration Board (“NCUA”), as liquidating agent
of Southwest Corporate Federal Credit Union (“Southwest”) and
Members United Corporate Federal Credit Union (“Members United”)
(collectively, the “Credit Unions”).

NCUA has sued various

financial institutions involved in the packaging, marketing, and
sale of residential mortgage-backed securities (“RMBS”) that the
Credit Unions purchased in the period from 2005 to 2007. 1

The

complaints in the NCUA actions generally assert that the
Offering Documents used to market and sell RMBS to the Credit
Nat’l Credit Union Admin. Bd. (“NCUA”) v. Morgan Stanley & Co.,
Inc., et al., 13 Civ. 6705 (DLC); NCUA v. Wachovia Capital
Markets, LLC n/k/a Wells Fargo Secs., LLC, 13 Civ. 6719 (DLC);
NCUA v. Goldman Sachs & Co., et al., 13 Civ. 6721 (DLC); NCUA v.
RBS Secs., Inc., et al., 13 Civ. 6726 (DLC); NCUA v. Barclays
Capital, Inc., 13 Civ. 6727 (DLC); NCUA v. UBS Secs., LLC, 13
Civ. 6731 (DLC); and NCUA v. Credit Suisse Secs. (USA) LLC, et
al., 13 Civ. 6736 (DLC).
Two other actions, initially brought by NCUA, have since
settled. NCUA v. Bear Stearns & Co., et al., 13 Civ. 6707
(DLC); NCUA v. Residential Funding Secs., LLC n/k/a Ally Secs.,
LLC, 13 Civ. 6730 (DLC).
Seven other actions are currently being brought by NCUA
against these and other defendants in Kansas and California.
1

2

Unions during the relevant period contained material
misstatements or omissions with respect to (1) whether the
underlying mortgage loans were underwritten according to certain
risk guidelines, and (2) certain statistics regarding the
quality of the underlying loans, including the loan-to-value
(“LTV”) ratio, the owner-occupancy status, and the borrowers’
debt-to-income (“DTI”) ratio.
This action is brought against UBS Securities, LLC (“UBS”),
and it asserts claims under Sections 11 and 12(a)(2) of the
Securities Act of 1933, 15 U.S.C. § 77k, l(a)(2) (2012)
(“Securities Act”); the Illinois Securities Act of 1953, 815
Ill. Comp. Stat. Ann. 5/12 & 13 (2013) (“Illinois Blue Sky
Law”); and the Texas Securities Act, Tex. Rev. Civ. Stat. Ann.
art. 581, § 33 (2013) (“Texas Blue Sky Law”).

UBS has moved to

dismiss (1) the Securities Act claims and (2) the state law
claims as to two MASTR Adjustable Rate Mortgage Trust 2007-HF2
(“MASTR 2007-HF2”) Certificates.

These two Certificates are

among twenty on which NCUA bases its claims for recovery in this
action.

One was purchased by Southwest; the other by Members

Union.
Several Opinions have already been issued in these
coordinated actions to address the pleadings.

One Opinion

addressed a motion to dismiss filed in the lead case brought by
NCUA in this district.

NCUA v. Morgan Stanley & Co., Inc., et
3

al., 13 Civ. 6705 (DLC), 2014 WL 241739 (S.D.N.Y. Jan. 22, 2014)
(“Morgan Stanley I”).

Another addressed NCUA’s motion to strike

certain affirmative defenses in Morgan Stanley’s answer.

NCUA

v. Morgan Stanley & Co., Inc., et al., 13 Civ. 6705 (DLC), 2014
WL 1673351 (S.D.N.Y. Apr. 28, 2014) (“Morgan Stanley II”).

A

third addressed a follow-on motion to dismiss filed in another
case brought by NCUA.

NCUA v. Wachovia Capital Markets, LLC, 13

Civ. 6719 (DLC), 2014 WL 1795294 (S.D.N.Y. May 6, 2014)
(“Wachovia”).

Familiarity with these Opinions is assumed; all

capitalized terms have the meanings previously assigned to them.
The motion to dismiss the Securities Act claims is granted;
their dismissal is undisputed by the parties for the reasons set
forth in Morgan Stanley I.

For the reasons set forth below, the

motion to dismiss the state law claims with respect to MASTR
2007-HF2 is denied.

BACKGROUND
The operative complaint includes the following allegations.
The Credit Unions purchased over $400 million in RMBS
underwritten or sold by UBS entities during the period between
January 2006 and July 2007.

Approximately $35 million of these

purchases were invested in the MASTR 2007-HF2 offering; Members
United purchased a MASTR 2007-HF2 Certificate for approximately

4

$20 million in February 2007, and Southwest purchased a MASTR
2007-HF2 Certificate for $15 million in July 2007.
The MASTR 2007-HF2 Certificates were rated AAA at the time
of purchase.

By late 2008, however, they had been downgraded to

junk status.

Twelve months after they were issued, almost 25%

of the aggregate loans in the MASTR 2007-HF2 securitization were
delinquent.

This rate was among the worst for the securities

sold by UBS that are at issue in this lawsuit.

Of the fifteen

other UBS securitizations, only four had a higher delinquency
rate within twelve months after issuance.

By June 2013, almost

29% of the aggregate loans in MASTR 2007-HF2 were delinquent. 2
NCUA alleges that the Offering Documents for MASTR 2007-HF2
contained material misrepresentations.

The July 30, 2007

Prospectus Supplement, which is cited in the Amended Complaint,
reads in relevant part as follows:
The primary originators of the Loans are UBS Home
Finance (“UBS Home Finance”), with respect to
approximately 51.11% of the Stated Principal Balance
of the Loans as of the Cut-Off Date. Approximately
46.46% of the Loans were originated by certain other
unaffiliated originators (each of which originated
less than 10% of the Loans) in accordance with the
underwriting guidelines of UBS Home Finance and
approximately 2.43% of the Loans were originated by
certain other originators (each of which originated
Although this suit involves twenty Certificates, it involves
only sixteen securitizations. The Credit Unions sometimes
purchased multiple Certificates for the same securitization.
The delinquency rate figures in the text are based on Table 4 in
the Amended Complaint, which provides “aggregate” delinquency
rates for all sixteen securitizations at issue in this suit.
2

5

less than 10% of the Loans) in accordance with such
originators’ underwriting guidelines.
(Emphasis added.)

The Prospectus Supplement also asserts:

All loans submitted for consideration are subject to
review for compliance with UBS Home Finance
guidelines, the applicable product matrix, as well as
with local, state, and federal mortgage lending
requirements.
UBS Home Finance’s principal underwriting method is
the Automated Underwriting System (AUS). Requirements
for the use of an AUS system in the decision making
process will depend upon several factors, namely the
loan amount. All loans must be underwritten via the
UBS Home Finance proprietary underwriting system.
(Emphasis added.) 3
Thus, the Prospectus Supplement represents that roughly
half of the loans were originated by UBS Home Finance and that
the remaining loans came from several other originators, no one
of which originated over 10% of the loans underlying the
securitization.

But, with the exception of fewer than 3% of the

loans, all of the originators used the UBS Home Finance
underwriting guidelines when issuing the loans.

The Amended

Complaint identifies two of the smaller originators for MASTR
2007-HF2: Alliance Bancorp and Silver State.

They originated

6.6% and 3.1% of loans in MASTR 2007-HF2, respectively.

Based

on the description in the Prospectus Supplement, these two

MASTR 2007-HF2 Prospectus Supplement, June 30, 2007, available
at http://www.sec.gov/Archives/edgar/data/1405861/
000088237707002000/d690307_424b5.htm.
3

6

originators would have been among those that used the UBS Home
Finance underwriting guidelines.
NCUA alleges that the Prospectus Supplement’s
representations regarding originators’ compliance with the UBS
Home Finance underwriting guidelines were material
misstatements.

It asserts that

the quality of the loans in the mortgage pool directly
affects the riskiness of the RMBS investment, and the
quality of the loans is dependent upon the
underwriting process employed. The preceding
statements [in the Prospectus Supplement] were untrue
at the time they were made because, among other
things, the Originators did not adhere to the stated
underwriting guidelines . . . .”
A report and analysis by the third-party due diligence firm
Clayton Holdings, which tested approximately 10% of all loans
securitized by UBS and sold as RMBS from early 2006 through the
middle of 2007, suggests that 20% of these loans did not comply
with the relevant underwriting guidelines.

There is no

indication in the Amended Complaint, however, that the analysis
performed by Clayton Holdings included any loans originated by
UBS Home Finance or pursuant to guidelines issued by UBS Home
Finance.
There are no allegations based on witness statements or
government reports that UBS Home Finance itself engaged in
shoddy underwriting practices.

UBS Home Finance is not

identified as an originator for any of the other eighteen
7

Certificates at issue in this lawsuit.

There are, however,

specific allegations of inferior underwriting practices at other
originators responsible for all or many of the loans underlying
the other eighteen Certificates at issue in this lawsuit.
There are also specific allegations of inferior
underwriting practices with respect to two of the underwriters
for MASTR 2007-HF2 who were jointly responsible for fewer than
10% of the Certificates’ loans.

Having consulted with counsel

in another RMBS lawsuit, FHLB v. Ally Fin. Inc., No. 11-10952
(D. Mass. filed June 29, 2012), NUCA alleges that a review of
certain loans originated by Alliance Bancorp in that lawsuit
reveals multiple deviations from the underwriting guidelines.
Additionally, a former Silver State employee has described, in a
public radio interview, how Silver State stopped adhering to
underwriting guidelines during the time period in question.

As

already described, the Prospectus Supplement asserted that the
loans issued by these two entities were originated in accordance
with the UBS Home Finance guidelines.
This case, along with the other related NCUA cases, was
filed on September 23, 2013.

Following the denial of the motion

to dismiss in Morgan Stanley I, 4 an Order of February 7, 2014
stayed all further motion to dismiss practice in the remaining
Discovery commenced in earnest in all cases as soon as the
Morgan Stanley I Opinion was issued.
4

8

cases pending resolution of a motion to transfer filed before
the Judicial Panel on Multi–District Litigation Panel (“JPML”).
On February 12, the JPML denied the motion to transfer.
Following a conference with the parties on March 11, the stay
was lifted, and a schedule was entered for briefing any further
motion to dismiss.
On March 25, UBS moved to dismiss the complaint.
responded by filing an Amended Complaint on April 11.
the operative complaint for present purposes.
moved to dismiss the Amended Complaint.

NCUA
This is

On May 5, UBS

The motion became fully

submitted as of June 6.

DISCUSSION
UBS’s motion consists of essentially two arguments.

First,

UBS contends that the Amended Complaint suffers from a “dearth
of originator-specific allegations” as NCUA has provided
originator-specific allegations of misconduct for originators
responsible for less than 10% of the loans underlying MASTR
2007-HF2 and none for UBS Home Finance, which originated more
than 50% of the loans underlying MASTR 2007-HF2.

Second, UBS

posits that the originator-specific allegations as to Alliance
Bancorp and Silver State are inadequate.
As a preliminary matter, it should be observed that similar
versions of these arguments have been addressed in this Court’s
9

previous Opinions -- the Opinions in Morgan Stanley I and
Wachovia and two Opinions in the RMBS cases brought by the
Federal Housing Finance Agency (“FHFA”), as conservator of the
Federal National Mortgage Association (“Fannie Mae”) and the
Federal Home Loan Mortgage Corporation (“Freddie Mac”).

Fed.

Hous. Fin. Agency v. UBS Americas, Inc., et al., 858 F. Supp. 2d
306 (S.D.N.Y. 2012) (“UBS”); FHFA v. JPMorgan Chase & Co., 902
F. Supp. 2d 476, 493 (S.D.N.Y. 2012) (“JPMorgan”).

The Court

assumes familiarity with these prior Opinions.
The state law claims at issue here are, for all relevant
purposes, strict liability claims subject to the pleading
standard set forth in Rule 8(a), which requires that the
complaint contain a “short and plain statement of the claim
showing that the pleader is entitled to relief.”
Fed.R.Civ.P.

Rule 8(a)(2),

See Morgan Stanley I, 2014 WL 241739, at *15; see

generally Morgan Stanley II, 2014 WL 1673351, at *3-*8 (S.D.N.Y.
Apr. 28, 2014) (discussing how the claims under the Illinois
Blue Sky Law and Texas Blue Sky Law are, for all relevant
purposes, strict liability claims).
must be “plausible on its face.”

Under Rule 8(a), any claim

Morgan Stanley I, 2014 WL

241739, at *15 (citing Ashcroft v. Iqbal, 556 U.S. 662, 678
(2009)).

It is well-established in this Circuit that “[i]n the

context of claims arising under the Securities Act and parallel
state laws, Rule 8(a) places a relatively minimal burden on the
10

plaintiff.”

Id. (citing NECA–IBEW Health & Welfare Fund v.

Goldman Sachs & Co., 693 F.3d 145, 157 (2d Cir. 2012)).
Moreover, the Second Circuit has emphasized that the factual
content of the complaint need only be “suggestive of” liability
to comply with the Rule 8(a) pleading standards.

N.J.

Carpenters Health Fund v. Royal Bank of Scotland Grp., 709 F.3d
109, 121 (2d Cir. 2013).

Additionally, plausibility is

determined based on the totality of the allegations in the
operative complaint; there is no “minimum” set of allegations or
“litmus test” for pleading in RMBS cases.

Wachovia, 2014 WL

1795294, at *2, *4 (citing N.J. Carpenters, 709 F.3d at 123
n.7).
Here, NCUA’s Amended Complaint includes allegations setting
forth reasons to believe that the twenty Certificates issued by
UBS included too many loans that were not issued in compliance
with their associated underwriting guidelines, and that that
same pattern held true for the two Certificates at issue in this
motion.

Those allegations include (1) the industry-wide

practice of originators failing to comply with underwriting
guidelines, including the practices of originators responsible
for many of the loans underlying the other eighteen
Certificates; (2) UBS’s poor performance during due diligence,

11

as reflected in the Clayton Holdings analysis; 5 (3) the poor
performance of each of the twenty UBS Certificates on which NCUA
has brought suit; (4) the downgrade of the two Certificates
underlying MASTR 2007-HF2 to junk status in 2008; and (5) the
rapid pace at which a very substantial percentage of the loans
for those two Certificates became delinquent.

Accepting these

allegations as true, we know the following: first, with respect
to 18 of the 20 Certificates at issue in this suit, that there
are an abundance of originator-specific allegations suggesting
systemic disregard of the relevant underwriting guidelines;
second, that UBS due diligence did not weed out loans that
failed to comply with the relevant underwriting guidelines; and
third, with respect to the two Certificates at issue in the
present motion, that the underlying loan performance was among
the worst of the 20 Certificates.

These allegations are

“suggestive of” systemic disregard of the underwriting
guidelines by the key originators responsible for the loans
underlying the two Certificates.

In that light, the allegations

specific to underwriting failures by Alliance Bancorp and Silver
State, even though these underwriters together contributed fewer
While there is no indication that the work conducted by Clayton
Holdings included review of any loans specifically underwritten
according to the UBS Home Finance guidelines, the inference is
that in securitizing loans UBS did not diligently reject loans
that failed their originators’ underwriting guidelines, despite
the above-recited statements in the Offering Documents.
5

12

than 10% of the loans backing the two Certificates, are
confirmatory and even unsurprising.

These allegations, when

viewed in their totality, render plausible NCUA’s claim that the
statements in the Offering Documents regarding the degree to
which the loans in the MASTR 2007-HF2 Certificates were issued
in compliance with their underwriting guidelines were material
misrepresentations.
In this motion, UBS places great emphasis on the fact that
Alliance Bancorp and Silver State were responsible for less than
10% of the loans underlying MASTR 2007-HF2, and that there are
no other originator-specific allegations for these two
Certificates.

It relies on language from various RMBS

decisions, including decisions from this Court, which have
underscored the importance of originator-specific allegations
when rejecting motions to dismiss premised on statements in
Offering Documents that loans had been underwritten in
compliance with originators’ guidelines.

This argument fails.

The guiding star for pleading an RMBS strict liability
claim remains Rule 8(a).

A well-pleaded claim must give a

defendant fair notice and state a plausible theory of liability.
Whether a pleading does so is a “context-specific task that
requires the reviewing court to draw on its judicial experience
and common sense.”

Iqbal, 556 U.S. at 679.

When the claim is that an offering document in a securities
13

transaction contains a material misrepresentation, the plaintiff
must include sufficient allegations to give fair notice of the
nature of the alleged misrepresentation and to plausibly plead
that it was a material misrepresentation.

Materiality is

usually a question of fact that is not amenable to resolution on
a motion to dismiss, but at the extremes, claims may be
dismissed for failure to plausibly plead that a particular
misrepresentation was in fact material.

See, e.g., Operating

Local 649 Annuity Trust Fund v. Smith Barney Fund Mgmt. LLC, 595
F.3d 86, 91 (2d Cir. 2010).

The complaint must also plausibly

plead that the representation was false.
When the plaintiff claims that a representation that the
loans underlying a security were originated in compliance with
underwriting guidelines was false, the complaint must contain
sufficient support to render that assertion plausible.
already, that is not a heavy burden.
241739, at *15.
liability.

As noted

Morgan Stanley I, 2014 WL

The allegations need only be “suggestive of”

N.J. Carpenters, 709 F.3d at 121.

litmus test that must be passed.

And there is no

Wachovia, 2014 WL 1795294,

at *4.
In many instances, plaintiffs have pointed to specific
practices at originators in making such claims.

And, similarly,

courts have discussed originator-specific allegations in
rejecting motions to dismiss.
14

One of the first decisions by a court of appeals to rely
upon the importance of originator-specific allegations was
Plumbers’ Union Local No. 12 Pension Fund v. Nomura Asset
Acceptance Corp., 632 F.3d 762, 772–74 (1st Cir. 2011).

In

Nomura, the First Circuit considered “whether enough has been
said in the complaint -– beyond conclusory assertions –- to link
[flawed industry-wide underwriting] practices with specific
lending banks that supplied the mortgages that underpinned the
trusts.”

Id. at 773.

The court noted that other courts had

relied on statements from confidential witnesses and internal
emails.

Id.

Ultimately, in Nomura, the court sustained the

underwriting allegations based on “the sharp drop in the credit
ratings after the sales and the specific allegations as to” a
“key” originator for the RMBS at issue.
omitted).

Id. at 772-73 (emphasis

A review of the district court record in Nomura,

indicates that the “key” originator was apparently responsible
for roughly 20% of the loans underlying one the securities at
issue.

See Amended Complaint, at 22, ECF No. 8, Plumbers’ Union

Local No. 12 Pension Fund v. Nomura Asset Acceptance Corp., No.
08-cv-10446 (RGS) (D. Mass. filed June 30, 2008).
More recently, in N.J. Carpenters, in the context of
assessing RMBS underwriting allegations, the Second Circuit
observed that a “majority of district courts in this Circuit
have agreed with the First Circuit [in Nomura], permitting
15

claims . . . to proceed where the plaintiff has provided a
fairly specific account of how the relevant underwriters had
systematically disregarded the guidelines disclosed in a
security’s registration statement.”
omitted).

709 F.3d at 122 (citation

The court found that the complaint at issue did

present allegations “suggestive of” liability when it recited
statements by former employees of the originator and the issuer
recounting the originator’s disregard of underwriting
guidelines.

Id. at 123.

These allegations were linked to the

specific securities by high rates of early payment default.

Id.

“These allegations, taken together, permit[ted] . . . the
reasonable inference” that the Offering Document’s description
of underwriting standards misstated actual practices.

Id.

The

court added that the downgrading of the securities by credit
rating agencies was “wholly consistent” with and “provided[d]
further support for” the allegation that underwriting guidelines
had been abandoned.

Id. at 125.

The RMBS complaints reviewed by this Court in either the
FHFA or NCUA lawsuits have similarly relied upon a variety of
allegations in asserting misrepresentations regarding compliance
with underwriting guidelines.

In UBS, the complaint relied

primarily on a forensic review of individual loan files.
858 F. Supp. 2d at 332.

UBS,

The claim was further supported by

government reports regarding failures by originators that
16

contributed loans to the securitizations, witness statements,
the collapse of credit ratings, and a surge in defaults.

Id.

In JPMorgan, the FHFA relied upon a similarly broad set of
allegations to make its claims.

In rejecting the motion to

dismiss that action’s complaint, the Court addressed the
defendants’ argument that the forensic review undertaken by FHFA
said nothing about the many Certificates whose loans were not
sampled.

JPMorgan, 902 F. Supp. 2d at 488.

The Court observed

that the linkage to individual Certificates was provided by the
loan performance and credit-rating histories of the
Certificates, adding that “these market events are telltale
signs of defects that were present in the securitizations all
along, albeit unbeknownst to the purchasing public.”

Id. at

488-89.
In the suite of lawsuits it has filed, NCUA has relied on
information about originators responsible for many of the loans
underlying the purchased Certificates, taken from government
reports, court filings, and other publicly available
information.

Morgan Stanley I, 2014 WL 241739, at *16.

When

combined with credit rating downgrades in Morgan Stanley I, this
Court found that sufficient to plausibly assert that the
originator disregarded underwriting guidelines.

Id.

Most recently, in Wachovia, this Court reviewed a complaint
in which the NCUA relied on an originator’s high originate-to17

distribute ratio, and a post-sale delinquency history, to find
that “when viewed in their totality” the allegations created a
plausible inference that the originator systematically failed to
comply with its reported underwriting guidelines.
2014 WL 1795294, at *3.

Wachovia,

The Court rejected “Wachovia’s attempt

to impose a pleading straight jacket on NCUA based on the facts
in N.J. Carpenters and Nomura.”

Id. at *4.

UBS is correct that, unlike each of these cases, there are
no originator-specific allegations regarding the originators
responsible for over 90% of the loans backing the two
Certificates in MASTR 2007-HF2.

UBS is also correct that this

Court and others have spoken of the importance of originatorspecific allegations.

Just last month, this Court noted that

“[t]he parties agree that, for NCUA to state plausibly any
claims regarding misrepresentations about underwriting conduct
in the Offering Document relating to AMN1 [the challenged
Certificate at issue], it must set forth originator-specific
allegations.”

Id. at *2.

These statements were made, however,

in the context of applying Rule 8(a)’s plausibility standard to
particular circumstances, i.e., to complaints that included
originator-specific allegations.

These statements cannot alter

the standard for conducting a Rule 8(a) analysis.

As stated in

this Court’s prior decisions, there is no one set of allegations
that every RMBS complaint must contain to survive a motion to
18

dismiss; Rule 8(a)’s standard must be applied in the context of
an individual complaint’s allegations.

Courts are permitted to

draw reasonable inferences from the alleged facts, and are
required to draw on their judicial experience and to apply
common sense.

N.J. Carpenters, 709 F.3d at 123 n.7.

When that

standard is applied here, the complaint plausibly pleads that
UBS made a material misrepresentation regarding the extent to
which the loans underlying MASTR 2007-HF2 complied with
underwriting guidelines.
This leaves only UBS’s second argument: that the
allegations specific to Alliance Bancorp and Silver State
allegations are inadequate.

Specifically, UBS argues that the

court filings and public interview “hardly evidence” that these
originators systematically disregarded underwriting standards.
This argument also fails.

Here, the Alliance Bancorp

allegations are supported by a loan analysis included in court
filings, and the Silver State allegations are supported by
publicly available information.

These sources, when combined

with the other allegations in the pleading, are more than
adequate to support the originator-specific allegations for
these two originators included in the Amended Complaint.

19

CONCLUSION
Defendant’s May 5, 2014 motion to dismiss is granted as to
the Securities Act claims only.

SO ORDERED:
Dated:

New York, New York
June 10, 2014
__________________________________
DENISE COTE
United States District Judge

20