NEW YORK–UBS AG has made an offer of judgment to NCUA for $33 million, plus prejudgment interest, to resolve a lawsuit filed by NCUA over the sale of mortgage-backed securities sold to corporate credit unions that later failed.
NCUA reported it has accepted the judgment. The court still must calculate interest, which NCUA stated will be "substantial."
The lawsuit proceedings were conducted in Manhattan federal court here.
The judgment brings to nearly $2.46-billion the funds that NCUA has recovered from banks since it began filing lawsuits over failed MBS in 2011. The deal is not related to a separate lawsuit that NCUA has filed against UBS that is pending in Kansas and is related to mortgage-backed securities sold to U.S. Central Credit Union.
The $33-million judgment involves securities sold by UBS to the former Southwest Corporate Federal Credit Union in Dallas and the former Members United Corporate Federal Credit Union in Albany, N.Y. bought for nearly $432.4 million from 2006 to 2007.
In its lawsuit, NCUA had alleged that the securities' offering documents contained untrue statements that the loans were originated in accordance with underwriting guidelines.
UBS "systemically abandoned the stated underwriting guidelines" described in the offering documents, NCUA had argued.
The NCUA said those untrue statements made the securities riskier than represented and contributed to the credit unions' suffering "significant losses."