Financial Services and Structured Finance Litigation

Financial Services and Structured Finance Litigation

When it comes to litigation regarding securitized assets, we wrote the book on it.

In the early days of the housing collapse and global financial crisis of 2008, TFPC attorneys litigated the largest RMBS repurchase case on record at the time, relating to claims against Fremont Investment & Loan. In the process the Firm uncovered and litigated irregularities in loan servicing. TFPC proceeded to work on the cutting edge of public policy issues relating to structured finance and housing markets. These included successfully lobbying against the servicer safe harbor.

Since 2008, TFPC has litigated a diverse range of claims involving securitization, dedicating itself to serving the interests of investors in these trusts. In furtherance of this objective, the Firm devised an innovative method to address certain collective action problems faced by investors in these trusts: the mortgage investors’ clearinghouse. This structure allowed for investors to pool their respective holdings in a way that preserved investors’ interest in confidentiality while allowing claims otherwise devised by so-called “no action clauses” to proceed.

Since 2008 we have litigated the full panoply of activities surrounding securitization, including:

  • The sale of loans into a securitization trust, including breaches of representations regarding loan origination, interim servicing, loan payment, and loan security
  • Duties of all parties to deal documents, including loan purchase agreements, pooling and servicing agreements (PSAs), interim servicing agreements, servicing agreements, and sub-servicing agreements
  • Insurance “wraps” and Reinsurance
  • Re-securitization
  • Investor due diligence and post-breach mitigation
  • Subordination levels
  • Securities fraud
  • Title concerns relating to trust collateral, including issues relating to Mortgage Electronic Registration Systems (MERS)

In addition, we have extensive experience with issues that continue to arise in these trusts not necessarily related to initial origination and underwriting of trust collateral. These “post-closing” claims involve not only noticing breaches of representations and warranties and servicing issues, but, crucially, securities administration and enforcement of provisions relating to payment waterfalls provided for in offering memoranda, prospectus supplements, and the like.

While RMBS has been the focus of litigation regarding securitization trusts during the past decade, TFPC has detailed experience in other asset classes that deploy similar structures in raising capital, including CMBS, auto loans, marketplace lending, and student loans.

Representative Matters

Countrywide Loans in non-Countrywide Trusts Initiative & Merrill Lynch Trusts Initiative

The firm has successfully settled numerous outstanding lawsuits against Bank of America and its affiliates relating to Countrywide Financial Corp. loan collateral placed in trusts not sponsored by Countrywide or Bank of America. These “non-Countrywide trusts” were not included in the global Countrywide settlement that took place in 2011, and continue to be a source of recovery for investors harmed by Countrywide’s now well-known origination and underwriting practices.

See additional information regarding the Countrywide Initiative.

In the Matter of the American Home Asset Mortgage Trust 2007-5

Case No. 27-TR-CV-15-354, Fourth Judicial District Court for Hennepin County, Minnesota (pending).

The firm is currently representing an RMBS investor in this Trust Instruction Proceeding to pursue claims against the Securities Administrator, Wells Fargo, regarding improper allocation of proceeds to investors through the trust waterfall after individual loans within the trust had been modified after the Closing Date.

GSAA Home Equity Trust 2006-2 ex rel. LL Funds LLC v. Wells Fargo Bank, N.A., et al.

Case No. 4:14-CV-04166-RAL (D.S.D.) (133 F. Supp. 3d 1203, Sept. 30, 2015) (200 F. Supp. 3d 912, Aug. 8, 2016) (counsel for plaintiff trust).

Knights of Columbus v. Bank of New York Mellon

Index No. 651442/2011 (N.Y. Sup. Ct.) (co-lead counsel for plaintiff Knights of Columbus in pursuing claims against the Trustee).

Deutsche Bank National Trust Company, as Trustee for the Trusts listed in Exhibits 1-A and 1-B v. Federal Deposit Insurance Corp., JPMorgan Chase Bank, N.A. and Washington Mutual Mortgage Securities Corp.

Case No. 1:09-CV-1656-RMC (D.D.C.) (co-lead counsel for plaintiff trusts).

LaSalle Bank N.A., Trustee for Certificateholders of Commercial Mortgage Pass Through Certificates, Series 2002-MW1, by and through GMAC Commercial Mortgage Corporation as Special Servicer v. Merrill Lynch Mortgage Lending, Inc.

Case No. 04-CV5452 (PKL), 2007 WL 2324052 (S.D.N.Y. Aug. 13, 2007) (lead counsel for plaintiff trust).

Video: Tal Franklin discussing LaSalle v. Merrill Lynch

Wells Fargo Bank, N.A., Trustee for Certificateholders of Commercial Mortgage Pass-Through Certificates, Series 2006-MF2, by and through Crown NorthCorp, Inc., as Special Servicer v. LaSalle Bank National Association

Case No. 3:07-cv-449 (S.D. Ohio) (WHR) (2010 U.S. Dist. LEXIS 12130, Oct. 29, 2010) (2010 U.S. Dist. LEXIS 76664, July 19, 2010) (2009 U.S. Dist. LEXIS 106487, Oct. 27, 2009) (2009 U.S. Dist. LEXIS 74854, Aug. 10, 2009) (2009 U.S. Dist. LEXIS 70514, July 24, 2009) (643 F. Supp. 2d 1014, July 8, 2009) (lead counsel for plaintiff trust).

Video: Paul Snyder discussing Wells Fargo v. LaSalle Bank Ohio

Wells Fargo Bank, N.A., Trustee for Certificateholders of Commercial Mortgage Pass-Through Certificates, Series 2006-MF2, by and through Crown NorthCorp, Inc., as Special Servicer v. LaSalle Bank National Association

Case No. 5:08-cv-1125-C (W.D. Okla.) (2011 U.S. Dist. LEXIS 93927, Aug. 23, 2011) (2011 U.S. Dist. LEXIS 35343, Apr. 1, 2011) (2010 U.S. Dist. LEXIS 61612, June 22, 2010) (2010 U.S. Dist. LEXIS 38279, Apr. 19, 2010) (2009 U.S. Dist. LEXIS 107185, Nov. 17, 2009) (lead counsel for plaintiff trust).

Video: Paul Snyder discussing Wells Fargo v. LaSalle Oklahoma

In re Fremont General Corporation

No. 8:08–BK–13421–ES (Bankr. C.D. Cal.) (2010 WL 4739439, June 9, 2010) (2009 WL 7146274, Nov. 19, 2009) (2009 WL 7146273, Nov. 16, 2009) (debtor’s securitization counsel).

Video: Jerry Phelps discussing In re Fremont

In re Residential Capital, LLC, et al.

Case No. 12-12020 MG (Bankr. S.D.N.Y.) (lead counsel for “Talcott Franklin group” of investors).

Maine State Ret. Sys. v. Countrywide Fin. Corp., et al.; Luther v. Countrywide Fin. Corp., et al., and Western Conference of Teamsters Pension Trust Fund v. Countrywide Fin. Corp., et al.

No. 2:10-cv-00302 MRP (C.D.Cal.); No. 2:12-cv-05125-MRP (C.D.Cal.); No. 2:12-cv-05122-MRP (C.D.Cal.) (counsel for objectors First National Bank of Rochelle and LL Funds).

First National Bank and Trust Company of Rochelle, Illinois v. The McGraw-Hill Companies, Inc., et al.

Case No. 13-C-5693 (N.D. Ill.) (co-lead counsel for plaintiff).

Wells Fargo Bank, NA v. UBS Warburg Real Estate Securities, Inc.

Cause No. 02-02849 (192nd Judicial District Court, Dallas County, Texas) (co-lead counsel for plaintiff trust).

LaSalle Bank N.A. v. Capco American Securitization Corp.

No. 02 Civ. 9916 (S.D.N.Y.) (2005 WL 3046292, Nov. 14, 2005) (2006 WL 177169, Jan. 25, 2006) (2006 WL 1227539, May 5, 2006) (lead counsel for plaintiff trust).

LaSalle Bank v. Citicorp Real Estate, Inc.

No. 01 CIV. 4389(AGS) (S.D.N.Y.) (2002 WL 181703, Feb. 5, 2002) (2002 WL 31729632, Dec. 5, 2002) (counsel for plaintiff trust).

ORIX Capital Markets LLC v. UBS Warburg Real Estate Securities, Inc., et al.

Cause No. 02-2889 (134th Judicial District Court, Dallas County, Texas) (co-lead counsel for plaintiff trust).

Financial Security Assurance Corp. v. Bay View Capital Corp.

No. 03 CV 7591 (AKH) (S.D.N.Y.) (counsel for defendant Bay View Capital Corp.).

EMC Mortgage Corp. v. MortgageIT, Inc. d/b/a MIT Lending

No. 3:06-CV-440-N (N.D. Tex.) (lead counsel for defendant MortgageIT).

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