According to documents filed in Connecticut federal court, Deutsche Bank National Trust, in its capacity as trustee of the Morgan Stanley ABS Capital Trust, is suing WMC Mortgage as successor-by-merger to WMC Mortgage Corp. and GE Capital alleging breach of contract concerning a mortgage securitization transaction encompassing loans totaling more than $666 million to 3,399 borrowers that was closed in 2007.

According to the complaint, the plaintiff alleges that the bulk of the mortgage loans were bad because the borrowers were not creditworthy or because WMC did not conform to underwriting standards. According to the complaint, WMC was said to have breached it representations and warranties, breached its duty to notify the trustee of breaches, has refused to repurchase the bad loans and has breached its duty to indemnify the trustee. Accordingly, the trustee is seeking damages in excess of $500 million.