In Re Wells Fargo Mortgage-Backed Certificates
In Re Wells Fargo Mortgage-Backed Certificates Litigation
Opinion
Opinion
Illston, J.
ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS’ MOTIONS TO DISMISS
On March 19, 2010, the Court heard oral argument on defendants’ motions to dismiss the complaint. Having considered the arguments of the parties and the papers submitted, and for good cause shown, the Court hereby rules as follows.
BACKGROUND
I. Background on Mortgage-Pass Through Certificates
These consolidated cases are brought by purchasers of mortgage pass-through certificates (“Certificates”), securities that entitle the holder to receive payments based on the principal and interest payments made by borrowers in an underlying pool of mortgage loans. Consol. Complaint ¶¶ 3, 40.
Certificates are created and sold to investors by the following process. First, a depositor acquires an inventory of mortgage loans that were either originated by the depositor or purchased from other loan originators. Id. ¶ 41. The depositor then securitizes the pool of loans so that rights to the loan revenues can be sold to investors. Id. ¶ 42. At this stage, the offerings are divided into grades, each of which carries a different level of risk and reward. The least risky loans are given a “AAA” rating, a grade that…