A class-action lawsuit led by the New Jersey Carpenters Health Fund has received preliminary approval from a federal judge in New York for a $100 million settlement of losses on mortgage-backed securities that lost value in the 2008 subprime mortgage crisis, according to attorney Joel Laitman.
Laitman, of the New York firm Cohen, Milstein, Sellers & Toll, said Judge Harold Baer gave preliminary approval Monday to the $100 million settlement. Laitman said Baer has set an Oct. 7 final approval hearing of the settlement with an issuer of mortgage-backed securities, Residential Accredit Loans Inc., which filed for bankruptcy in May 2012.
Laitman said if Baer gives final approval, the $100 million will be held in escrow, pending a resolution of the entire case.
Laitman said the case has been ongoing since 2008 on behalf of thousands of investors with estimated losses of more than $5 billion on mortgage-backed securities that lost value during the financial crisis.
The lead plaintiff, the New Jersey Carpenters Health Fund, had invested about $1 million in mortgage-backed securities and lost a significant amount of that investment, Laitman said. The defendants in the suit include several underwriters of mortgage-backed securities: Goldman Sachs, Citigroup, UBS and Deutsche Bank. A spokesman for Goldman Sachs declined to comment on the case.
"New Jersey Carpenters brought this case not only on behalf of themselves but on behalf of everybody who bought into these public offerings," Laitman said.
The Edison-based New Jersey Carpenters Funds is a group of pension, annuity and health funds established through collective bargaining agreements between the United Brotherhood of Carpenters & Joiners of America and the carpenters' employers throughout New Jersey.
Reporter Beth Fitzgerald is @BethFitzgerald8 on Twitter.