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49 » VISIT US ONLINE @ DSNEWS.COM JUDGE DISMISSES RMBS COMPLAINTS AGAINST BANK OF AMERICA, U.S. BANCORP A federal judge dismissed claims in lawsuits against U.S. Bancorp and Bank of America accusing the two banks of fail- ing in their duties as trustees for residential mortgage-backed securities that were alleg- edly found to have defects after they were sold, causing billions of dollars in losses to investors. U.S. District Judge Katherine Forrest in Manhattan dismissed the claims against the two banks in three separate decisions. In the first decision, a group of institutional inves- tors—BlackRock Inc., Allianz SE's Pacific Investment Management Co., and TIAA- CREF—sued U.S. Bancorp, claiming the bank was responsible for 843 toxic mortgage- backed securities totaling about $778 billion in collateral. Forrest ruled that the claims were not pleaded correctly on 33 of the trusts and that the remaining 810 trusts did not fall under her jurisdiction. In the second decision, Forrest dismissed a claim from the National Credit Union Administration, ruling that the NCUA lacked standing to sue the two banks because the certificates for 74 trusts, which were purchased by five corporate credit unions that later failed, had been re- securitized. Likewise, Forrest ruled that investors based in Ireland and the Cayman Islands lacked standing to sue the two banks. All of the plaintiffs were given a chance to amend their complaints. An attorney for BlackRock, Allianz, and TIAA-CREF, when reached by email, declined to comment on the judge's decision. Bank of America spokesman Lawrence Gray- son declined to comment, and U.S. Bancorp spokesman Dana Ripley told DS News, "We are pleased with the rulings." is was the second victory for Bank of America in court in less than a week regarding its mortgage banking practices. e previous week, a federal judge threw out a suit filed by the City of Los Angeles that claimed the bank engaged in discriminatory lending practices that led to massive defaults, foreclosures, and eventually blight in Los Angeles neighborhoods. A settlement in which Bank of America and U.S. Bancorp agreed to pay $69 million to Washington Mutual in a similar case in which the two banks were accused of failing in their duties as trustees for mortgage- backed securities was approved by Forrest in March. Just as in the three cases that were re- cently dismissed, Washington Mutual alleged that breaches on the part of the two banks led to massive losses when the financial crisis hit. OUTLOOK FOR HOUSING AND ECONOMY REMAIN POSITIVE DESPITE Q1 GDP CONTRACTION In its second of three estimates of real gross domestic product (GDP) growth for the first quarter, the U.S. Bureau of Economic Analysis (BEA) issued a downward revision of what analysts had already deemed "paltry" growth of 0.2 percent in the advance estimate for Q1 reported at the end of April. According to the BEA's second estimate for Q1, which is based on more complete source data than were available for the advance estimate, the GDP contracted at an annual rate of -0.7 percent. Despite economic growth taking a step backward, the forecast for housing for the rest of the year remains positive, according to Fannie Mae SVP and chief economist Doug Duncan. New home sales increased by 6.8 percent in April up to 517,000 annualized units; the National Association of Realtors' Pending Home Sales Index has risen by 14 percent in the last 12 months; existing home sales are at a nine-year high; and purchase applications recovered at the end of May from a slow first half of the month up near a two-year high. "Housing indicators look good," Duncan said. "Pending home sales, new home sales, and starts look good. An underlying number in the GDP, the gross domestic income, was positive. And the confidence numbers seem to be doing well (the Conference Board's Index rose 1.1 points up to 95.4 in May). e GDP seems to be inconsistent with the underlying trend line." e contraction of GDP in the first quarter was largely driven by negative contributions from exports, nonresidential fixed investment, and state and local government spending. Positive contributions from personal consumption expenditures, private inventory investment, and fixed residential investment partly offset the aforementioned negative contributions. Also contributing to the GDP's contraction was an increase in imports, a subtraction in the calculation of GDP. One more estimate for Q1 GDP growth came out at the end of June, but economists such as Duncan were already looking ahead to Q2. "People looking at the data for the second quarter are predicting that it's going to be around 2 percent," Duncan said, adding that he expects the GDP growth to continue on a modest path in Q2 and by the end of the year achieve the level of Fannie Mae's original forecast for the full year of 2015, which was an annualized rate of 2.6 percent. While the downward revision of April's already weak advance estimate was disappointing, housing is still a bright spot in the economy, according to Freddie Mac deputy chief economist Len Kiefer. "While the tracking data signaled a weaker GDP reading, it's still discouraging to see it and to see the economy struggle with the same reoccurring first-quarter story for the past few years," Kiefer said. "Overall, we estimate real GDP will grow 2.3 percent in 2015, revised from a 2.6 percent growth previously estimated. e one silver lining in the GDP numbers was residential construction was boosted to a 5 percent pace from the prior 1.3 percent showing that housing is beginning to contribute more to the overall economy." Real GDP grew at an annualized rate of 2.2 percent in the fourth quarter of 2014 and 2.4 percent for the entire year. There were 3.464 bankruptcy filings per day in the United States in May 2015,down from 4,081 filings per day for May 2014, according to AACER bankruptcy data reported by Epiq Systems. KNOW THIS

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