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Powell v. Ocwen Financial Corp. — ERISA Plan Assets and RMBS Trust Certificates

The Second Circuit partially affirmed and partially vacated the Southern District of New York's summary judgment in Powell v. Ocwen Financial Corp., a case brought by trustees of an ERISA-regulated pension fund against mortgage servicers for alleged breach of fiduciary duty regarding residential mortgage-backed securities investments. The court held that mortgages underlying RMBS notes issued under indenture agreements lack substantial equity features and therefore are not plan assets under the DOL's plan-asset regulation (29 C.F.R. § 2510.3-101). However, the court held that mortgages underlying RMBS trust certificates do represent equity interests and therefore qualify as plan assets under ERISA's look-through exception. The case was remanded for further proceedings on the certificate-based investments.