On May 11, 2015, Judge Denise Cote of the United States District
Court for the Southern District of New York found Nomura Holdings
Inc. liable for inaccurately characterizing the mortgage loan
collateral backing seven RMBS certificates it sold to Fannie Mae
and Freddie Mac between 2005 and 2007. The suit against
Nomura is the last that remains of sixteen lawsuits originally
filed against by FHFA against RMBS issuers and sellers alleging
violations of Sections 12(a)(2) and 15 of the 1933 Securities Act
and state securities laws. Judge Cote's decision followed
a nearly 4-week bench trial that concluded on April 9, 2015.
In a 361-page decision, Judge Cote found, among other things,
that 45% to 59% of the sample loans were materially defective
insofar as they deviated from relevant underwriting guidelines, and
that 27% of the sample loans were subject to inflated
appraisals. Judge Cote treated this as strong circumstantial
evidence that the appraisers did not believe
