An investor consortium led by BlackRock and Pacific Investment Management Co (PIMCO) is suing six global banks for their roles as trustees in originating and selling residential mortgage-backed securities (RMBS) issued between 2004 and 2008.

Filed in the New York State Supreme Court, the lawsuit allege the trustee banks, including Deutsche Bank, HSBC, US Bancorp, Citibank, Wells Fargo, and Bank of New York Mellon (BNYM) of failing to properly oversee payments and enforce terms on over $2tn in residential mortgage-backed securities.

In addition to BlackRock and PIMCO, the cases were also filed on behalf of Charles Schwab, DZ Bank and other institutional investors, including Bernstein Litowitz Berger & Grossmann.

According to the court cases, these trustees breached their duties to protect investors by failing to force lenders and sponsors of the securities to buy back the loans that did not satisfy the quality standards.

A complaint against Citibank was cited by Reuters as saying that the bank was aware of industry wide abandonment of underwriting guidelines for the loans.

The lawsuit against BNYM claims that the trustee and its responsible officers knew of pervasive, material breaches of originators, however they did not do any thing to protect the trusts.

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A source familiar with the case was quoted by Reuters as saying that the investors are seeking damages for losses that surpassed $250bn and relate to more than 2,200 residential mortgage-backed securities trusts issued between 2004 and 2008.