Wells Fargo and a group of institutional investors, including funds affiliated with BlackRock and PIMCO, reached a settlement that resolves two class action lawsuits in federal and state court related to Wells Fargo’s role as trustee for certain residential mortgage-backed securities (RMBS) trusts created more than a decade ago.

Under terms of the agreement, Wells Fargo will pay $43 million and Wells Fargo denies the claims in the litigation. Separate from the settlement amount the company is paying, up to $70 million from certain trust reserve accounts established in connection with the litigation will be released. The settlement also resolves a related action seeking declaratory relief against Wells Fargo, as well as claims by Wells Fargo against certain investment advisors. Federal and state cases alleging similar claims filed by certain other institutional investors are not part of the settlement.

“Consistent with our sound business practices, we believe that we appropriately fulfilled our duties as trustee by performing the responsibilities prescribed in the relevant contracts for these decade-old trusts,” said Troy Kilpatrick, head of Wells Fargo Corporate Trust Services. “While we disagree with the allegations, it is in the best interest of all parties to put this protracted litigation behind us and we are satisfied with this settlement.”

The agreement, which is subject to approval by the court, resolves claims regarding the fulfillment of Wells Fargo’s duties as trustee — including providing certain notifications to certificate holders — for 271 RMBS trusts created between 2004 and 2008. Wells Fargo’s duties were limited to administering the trusts, and it had no role in the origination or servicing of the mortgages at issue. The agreement resolves a significant portion of the claims asserted against the company in connection with its role as trustee for RMBS trusts. Separate lawsuits filed by certain other institutional investors concerning 58 trusts are not covered by the agreement.

“Following more than four years of litigation, including fact and expert discovery, we concluded that this agreement provides a fair and reasonable resolution of the claims,” said PIMCO, BlackRock and the other institutional investor plaintiffs through their counsel, Timothy A. DeLange of Bernstein Litowitz Berger & Grossmann LLP. “We appreciate Wells Fargo’s professionalism in reaching this agreement and commend their efforts to work with certificate holders to resolve the litigation. While we believe the claims are meritorious, the settlement provides an immediate and concrete benefit for class members, while bringing the litigation to a close.”
Wells Fargo has previously disclosed the RMBS Trustee litigation in its public filings, including in its most recent Quarterly Report on Form 10-Q. The settlement amount was fully accrued as of June 30, 2018.