U.S. judge narrows MBS lawsuit against WaMu

Mon Oct 24, 2011 12:24pm EDT

* Lawsuit can proceed on 13 tranches, 110 are dismissed

* Judge grants class certification on remaining claims

Oct 24 (Reuters) - A U.S. judge narrowed a lawsuit brought by buyers of mortgage backed securities from Washington Mutual Inc who alleged they were misled on the quality of the underlying loans, according to a ruling.

The decision released last week finds that plaintiff pension funds have the right or standing to proceed on 13 tranches of MBS, but dismisses from the lawsuit claims related to 110 other tranches.

A tranche is a piece of a securities offering.

U.S. District Judge Marsha Pechman in Seattle also granted class certification for the 13 remaining tranches in the case.

Plaintiff attorney Steven Toll said he was pleased about the class action ruling.

"While we are disappointed that the court did not uphold our standing to represent those who filed similar claims against WaMu, this is very good news for investors in the class," Toll said in a statement.

A WaMu representative did not have an immediate comment on Monday.

Pechman ruled that the plaintiffs only have the right to pursue claims on tranches that they actually purchased, but not others that were sold in the same offering.

Pechman's ruling is similar to a separate opinion last year from a federal judge in Los Angeles, who dismissed MBS claims involving Bank of America's Countrywide unit.

The WaMu case in U.S. District Court, Western District of Washington, is In Re Washington Mutual Mortgage-Backed Securities Litigation, 09-37.

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