NAB freed of HomeSide class action
National Australia Bank (NAB) has potentially played out the final chapter in its ill-fated entry into the American mortgage market after the United States federal court dismissed a proposed class action regarding the disclosure surrounding mortgage servicing rights held by HomeSide US.
As part of the ruling it was deemed that the US District Court for the Southern District of New York had no jurisdiction over claims made on behalf of NAB ordinary shareholders.
Furthermore, a claim by a holder of NAB American depository receipts was also dismissed as the court ruled the holder had not suffered any damages according to US federal security laws.
NAB acquired HomeSide US in 1997 for $1.7 billion and subsequently suffered losses in excess of $3 billion after it was discovered in 2001 the mortgage business’s interest rate calculations contained errors.
The top three executives of HomeSide were forced to resign as a result of the episode.
NAB eventually ended its involvement with HomeSide in October 2002 when it sold the business to Washington Mutual for consideration of $3.7 billion.
The experience led then NAB chief executive Frank Cicutto to vow that the bank would never again revisit mortgage products in foreign markets.
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