According to the complaint, all persons and entities who purchased or otherwise acquired interests in the Issuing Trusts, or RAMP Trusts, pursuant or traceable to a single Registration Statement and accompanying Prospectuses filed with the SEC by RAMP, a subsidiary of Residential Capital, LLC f/k/a Residential Capital Corporation ("RCC"), 1 on March 31, 2006 (File No. 333-131211) (the "Registration Statement").
Pursuant to the Registration Statement and Prospectus Supplements incorporated therein (collectively, the "Offering Documents"), $3.6 billion of RAMP mortgage-backed securities ("MBS") designated Mortgage Pass Through Certificates (the "Certificates") were sold to Plaintiff and the Class in seven (7) Offerings between July 28, 2006 and March 7, 2007
(collectively, the "Offerings").
This action arises from the conversion by Residential Capital of billions of dollars largely sub-prime and Alt-A mortgage loans into $3.6 billion of purportedly "investment grade" residential MBS. The value of the Certificates was directly tied to repayment of the underlying mortgage loans since the principal and interest payments due to investors were secured and derived from cash flows from those loans.
The Underwriters received massive fees for their work in connection with the Offerings. Based on, inter alia, the Underwriters' due diligence, or lack thereof, and the representations in the Registration Statement and Prospectuses relating to the underwriting of the Certificate collateral, NRSRO's such as Moody's and S&P assigned the Certificates among the highest ratings applicable to such debt issues. At the time of each Offering, the Certificates were issued at approximately par, or $100.00 per unit.
S. Following the issuance of the Certificates, disclosures began to emerge revealing the Originators routinely disregarded the underwriting guidelines in originating the mortgage loans. These disclosures were confirmed by substantially higher rates of delinquencies and foreclosures on the collateral underlying these "highly-rated" debt issues. These disclosures and the poor performance of the collateral caused the Ratings Agencies to review and revise the ratings assigned to the Certificates due to the fact that the true nature of the collateral had not been properly assessed at the time of the Offering. The rating agencies dramatically downgraded the Certificates as a result of the revelations regarding the true underwriting practices used to originate the collateral and the true value and quality of the properties underlying the collateral, which subsequently caused the substantial decline in the value of the Certificates. Plaintiff purchased Certificates issued by one or more of the RAMP Trusts pursuant to the Offering Documents described herein. However, as of the date the within action was commenced, Plaintiff's investment suffered a decline of over 67 percent.