Americas: Moving on, slowly

Author: | Published: 21 May 2015

Last month's ruling in the Federal House Finance Authority's (FHFA) case against Nomura and RBS may mark the beginning of closure for the residential-mortgage backed securities (RMBS) market, after the beating it has taken following the financial crisis. The blows to RMBS were both physical to its value, and emotional to its reputation.

The case centred on seven RMBS deals that the Japanese financial company issued, four of which RBS underwrote. The FHFA claimed the offering documents did not accurately reflect the underlying mortgages. The judge agreed. In her ruling, Judge Denise Cote wrote, 'the magnitude of the falsity, conservatively measured, is enormous.' The misleading RMBS were purchased by Fannie Mae and Freddie Mac,...