DEC 26, 2013 12:30pm ET

BayernLB, Morgan Stanley to End RMBS Suit

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Morgan Stanley and Bayerische Landesbank agreed to end litigation over almost $486 million worth of residential mortgage-backed securities, according to a court filing.

Bayerische Landesbank, based in Munich, sued Morgan Stanley in New York State Supreme Court in Manhattan in January 2012 over securities purchased in 22 offerings in 2006 and 2007, saying the lender knew the loans underlying the bonds were riskier than promised and didnít conform with underwriting standards.

The parties said in the filing that they have agreed to end the suit. The filing didnít state whether the firms had settled the matter, or any terms of such an accord. Mark Lake, a spokesman for Morgan Stanley, declined to comment on the filing. Gerald H. Silk, an attorney representing BayernLB, didnít return a voice-mail message seeking comment.

BayernLB, Germanyís second-biggest state-owned lender, has filed similar suits against other banks over mortgage securities in the same court over the past two years, including Bank of America Corp., Deutsche Bank AG and JPMorgan Chase & Co.

Pools of home loans securitized into bonds were a central part of the housing bubble that helped send the U.S. into the biggest recession since the 1930s. The housing market collapsed, and the crisis swept up lenders and investment banks as the market for the securities evaporated.

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