... The Two Attorneys General of the Two States Imposing Duties Investigate.
Trustees of Mortgage Loan Securities, such as reportedly Bank of New York Mellon and Deutsche Bank, may have had a Fiduciary Duty to examine whether the paperwork was proper and, if not, to require that it be made proper for the protection of the Investors in the Trust. The Securitizations were also reportedly set up mostly in New York State, and the rest in Delaware. If so, only New York and Delaware Law would seemingly apply. Only New York and Delaware Fiduciary Law would impose obligations of inquiry, disclosure and Good Faith and Fair Dealing, for examples.
It is of great interest to Mortgage Investors and Trustees therefore that the New York State and Delaware State Attorneys General are investigating whether the Trustees violated any of their Fiduciary Duties at the beginning of their trust responsibilities, when they received the Mortgage Loan Securitization papers and presumably were or should have been on inquiry. See Gretchen Morgenson, "Two States Ask if Paperwork in Mortgage Bundling Was Complete" p. B1, col. 2 (New York Times, "Business Day" Section, Monday, June 13, 2011).
Although this news is probably too recent to draw attention on other sites, in general terms it appears to be questionable how far the Fiduciary Law of Delaware would adapt to the situation under investigation by the Attorneys General. See generally "Delaware Corporate and Commercial Litigation Blog". New York Law may or may not present a different story. See also "Contracts Law Fallout From the Madoff Affair" (Contracts Prof Blog posted May 31, 2011). In addition, see also the post here about recent Court decisions including the New Jersey Federal District Court decision addressed in the post here on May 25, 2011, "Rescission of JPMorgan Chase Mortgage Coverage: 'Materially False or Misleading'...".
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