ADDITIONAL CASESFederal Deposit Insurance Corporation, as receiver for Guaranty Bank, Plaintiff v. U.S. Bank National Association, Defendant; 1:15-cv-06570Federal Deposit Insurance Corporation, as receiver for Guaranty Bank, Plaintiff v. Citibank, N.A., Defendant; 1:15-cv-06574OPINION & ORDER Plaintiff Federal Deposit Insurance Corporation acting as receiver for Guaranty Bank (“FDIC-R”) brings this action against Defendants The Bank of New York Mellon (“BNY”), U.S. Bank National Association, and Citibank, N.A. (individually, “BNY,” “U.S. Bank,” and “Citi”; collectively “Defendants”) for Breach of Contract, violation of the Streit Act, and violation of the Trust Indenture Act (TIA). Compl., ECF No. 1. On September 30, 2016, the Court dismissed the Complaint for lack of subject matter jurisdiction holding that Plaintiff lacked standing to sue Defendants. ECF No. 38. On October 14, 2016 Plaintiff sought reconsideration. ECF No. 39. The Court granted reconsideration in part, permitting Plaintiff to amend its complaint to resolve the standing issue. See ECF No. 47. Plaintiff filed its Amended Complaint on December 8, 2017. ECF No. 51. Defendants have now moved to dismiss the Amended Complaint. ECF No. 64. For the reasons outlined below, Defendants’ Motion to Dismiss is GRANTED.BACKGROUNDI. Securitization GenerallyThis matter stems from conduct of a Trustee of Residential Mortgage Backed Securities (RMBS). To create RMBS, mortgage loans are pooled together in a trust, which issues securities that represent interests in cash flows on a pool of mortgages. Am. Compl. 39, ECF No. 50. The securitization process begins when an acquirer of mortgage loans (a “sponsor” or “seller”), such as Countrywide, sells a large pool of such loans to a depositor, which is typically a special-purpose affiliate of the sponsor. Id. at 40. The depositor then conveys the pool of loans to a trustee, in this case BNY, pursuant to a Pooling and Service Agreement (“PSA”). Id. at 41. Each securitization contains “tranches” of interests in payments made by borrowers on the loan. Id. Each tranche has a different level of risk and reward, and its rating is issued by a nationally recognized credit agency. Id. at 44. The most senior tranches have higher ratings and are entitled to payment in full first, but, junior tranches, which have lower ratings and are paid after senior tranches, offer higher potential rewards. Id. Any shortfalls in principal and interest payments are allocated first to junior tranches. Id. As payments from mortgage borrowers are the source of funds to pay certificate holders, the credit quality of the security turns on the credit quality of the underlying loans. Id. at 45.The trust is tasked with issuing certificates representing tranches, which are then sold to an underwriter who re-sells the certificates at a profit to investors. Id. at 41. The sponsor earns profit based on the excess of the proceeds of the sale of certificates to the underwriter over the cost of purchasing the mortgage loans. Id. The PSA for each trust requires a “servicer” to manage the collection of payments on the mortgage loans. Id. at 42. “The servicer’s duties include monitoring delinquent borrowers, foreclosing on defaulted loans, monitoring compliance with representations and warranties regarding loan origination, tracking mortgage documentation, and managing and selling foreclosed properties.” Id. The trustee is responsible for delivering monthly remittance reports to holders of certificates, which describe the performance of underlying loans and compliance with the PSA. Id. at 43. The servicer provides data for these reports.II. Plaintiff’s AllegationsAt bottom, Plaintiff alleges that BNY abdicated its duties as the trustee to certificateholders such as Plaintiff in five different ways, running afoul of both the PSAs and relevant federal law. Id. at 2. First, BNY allegedly failed to ensure that key documents for the loans were included in the mortgage files and to create an exception report identifying incomplete mortgage loan files. Id. at 10. As a result, Defendant BNY did not ensure that the rights, title, and interest in the mortgage loans were perfected and properly conveyed, and the sponsor was not required to substitute compliant loans for the loans with incomplete files or to repurchase the loans that ultimately caused Plaintiff significant losses. Id. In support of its allegations, Plaintiff notes that BNY admitted publicly that it was aware of Countrywide’s pervasive failure to deliver complete mortgage files, and that BNY commenced foreclosure actions between 2005 and 2008, which highlighted pervasive document delivery issues. Id. at
