An unexpected move last month by a residential mortgage-backed securities trustee has created new risk for investors in non-agency deals issued prior to the financial crisis.
Wells Fargo Bank, N.A., as trustee for RMBS transactions, in June notified bond investors that it would withhold some of the funds from clean-up calls of 20 transactions.
The move was made so that the Sioux Falls, South Dakota-based financial institution can establish reserve accounts to cover current and future legal expenses on the deals.
Source: Mortgage Daily
