Knights of Columbus expands case against Bank of New York Mellon [Mortgage Banking]

The Knights of Columbus, a Dallas-based Catholic men's organization, has expanded its suit against The Bank of New York Mellon (BNYM), the trustee that has negotiated a large settlement on behalf of a large group of beneficiaries with Bank of America over j 8 trusts containing pools of residential mortgages.

In a press release announcing the expanded legal action, the following explanation was given: "Knights of Columbus has expanded its case against The Bank of New York Mellon to include claims of breach of contract, breach of fiduciary duty, negligence, gross negligence, recklessness and unfair trade practices. BNYM serves as the Knights' trustee for the 18 trusts at issue containing residential mortgage loans."

BNYM had announced earlier that it had reached a settlement on behalf of a good percentage of the Bank of America MBS investors that settled their claims. But soon thereafter, some of the investor groups asserted that the settlement was inadequate and they intended to challenge its validity in court.

The Knights explained in a release that its case "began as a non-adversarial action seeking an accounting for losses to borrowers and investors, based on the conduct of Bank of America, which collected payments on the loans. The Knights also requested information from BNYM that would help demonstrate that BNYM did not participate in any wrongdoing. To date, BNYM has not provided that information."

The Aug. 1 6 press release issued by the law firm Talcott Franklin PC (outside counsel to the Knights) asserts: "[Wjithout consulting the Knights and without determining the value of the Knights' claims, BNYM asserts that it settled the claims underlying the Knights' suit, and then sought to compel the Knights to accept the result. The attorney general of the state of New York has objected to the overall settlement as 'unfair to trust investors.'"

The Knights of Columbus sells life insurance to its members and provides a wide range of insurance products, including annuities, disability-income insurance and longterm care insurance.