A federal judge ruled that a group of investors suing Ally Financial‘s (GJM) Residential Capital unit and Royal Bank of Scotland over mortgage-backed securities losses did not qualify for class action status and must file independently. The New Jersey Carpenters Health Fund, Vacations Fund and the Boilermaker Blacksmith National Pension Trust sued both companies, alleging documents misled them on whether or not proper underwriting guidelines were followed for the loans backing three deals, one named RALI and two were different classes of Harborview. But U.S. District Judge Harold Baer ruled the investors raised “individualized issues” for which class treatment was not superior. Defendants argued, among other things, that some purchasers knew that the originators were “loosening or lowering” their underwriting standards. “This presents a serious challenge to class certification because it provides for unique defenses that require a great deal of individualized evidence,” Baer wrote. “The fact that putative class members purchased securities at different dates relative to different disclosure events … demonstrates that the proposed class would include investors with different levels of knowledge, and that such individual issues predominate.” Baer also said that assigning the plaintiffs a class action would “present obstacles to the management of the litigation.” “The necessity of hearing all this individualized evidence defeats the requisite superiority of class treatment,” Baer ruled. Write to Jon Prior. Follow him on Twitter: @JonAPrior