In mid-2007, at the very outset of the crisis, Patterson Belknap formed its interdisciplinary Mortgage and Credit Crisis Team. As one of the few elite firms positioned to be adverse to most major banks and other financial institutions, and with attorneys who have decades of relevant experience in complex financial litigation, we were well positioned to advise a broad array of clients. Since its formation, this team has played a critical role in cutting edge matters arising out of today's constantly changing financial markets environment.
This market positioning has led to a host of complex matters in this area. One area of particular focus has been the work of the RMBS Group, a sub-group within the larger Mortgage and Credit Crisis Team that focuses on disputes involving residential mortgage-backed securities transactions. Due to our team's early formation and insight, we were able to make a substantial footprint and establish leadership before the crisis received significant global attention in 2008. As a result, we believe that we are now one of the most active law firms in the area with 13 active litigations and dozens of RMBS transactions in various stages of investigation and/or negotiation.
In particular, we have become the leading law firm representing the financial guaranty (or "monoline") insurance industry in its efforts to recover against financial institutions and other sponsors of RMBS for breaches of representations and warranties and other claims relating to the quality of the mortgage loans included in these transactions. We currently represent five monoline insurers in connection with their remediation efforts relating to dozens of separate RMBS transactions, including investigation and prosecution of billions of dollars in claims for breaches of representations and warranties and other wrongdoing against some of the world's largest financial institutions, as well as advising on restructuring and other loss-mitigation options.
We are also very active in representing institutional investors in RMBS with diverse goals and strategies, including investors that are initiating investigations and/or pursuing legal actions pertaining to misrepresentations in the issuance of RMBS, as well as investors interested in advice relating to legal risks and opportunities associated with investment in legacy RMBS.
Consistent with our leadership position, we believe that we have one of the largest groups of any law firm focused on these matters, with 12 partners, three counsel, and more than 50 associates from our litigation, creditors' rights, corporate and real estate departments collaboratively working on various aspects of these matters.
Chambers USA has recognized Patterson Belknap's RMBS litigation practice, with one commenter noting that, “[t]he caliber of people at both partner and associate level is exceptional.” The firm is also “Highly Recommended” for Litigation – New York in Euromoney Institutional Investor PLC’s Benchmark Plaintiff 2014 guide. Benchmark quoted a client as saying, “for residential mortgage-backed securities litigation, they are a go-to firm.”
Following are some of the RMBS Group's principal activities and accomplishments over the last three years:
- Analyzed representations and warranties, "put-back" mechanics, direction and indemnity provisions, no action clauses, waterfalls, and other key aspects of PSAs and MLPAs for hundreds of separate RMBS transactions, and advised clients as to the risks and opportunities associated therewith;
- Engaged and oversaw the work of seven different forensic loan file due diligence firms in their analysis of tens of thousands of mortgage loan files for breaches of representations and warranties;
- Analyzed provisions of dozens of originators' underwriting guidelines pertaining to key issues in dispute, including origination standards applicable to "stated income" loans;
- Worked with statisticians to develop sampling and extrapolation protocols to aid in analysis of breach rates in large pools of loans;
- Advised clients in connection with "put-backs" associated with breaching loans as a result of findings of pervasive fraud, failure to adhere to applicable underwriting guidelines and misrepresentation of key loan characteristics (e.g., debt-to-income ratios and occupancy);
- Assisted in the negotiation of repurchase obligations;
- Represented numerous clients in the negotiation and execution of loan-by-loan and global settlements aggregating more than $2.5 billion;
- Represented clients in connection with the bankruptcies of RMBS sponsors/originators;
- Brought 19 lawsuits (including the following currently active lawsuits) on behalf of monoline insurers and investors against major financial institutions, involving several billion dollars in claims, including breach of representations and warranties and, in certain cases, fraud or violations of federal or state securities laws:
– Ambac Assurance Corp. v. Countrywide Home Loans, Inc., Index No. 651612/10 (N.Y. Sup. Ct.)
– MBIA Insurance Corp. v. Credit Suisse Securities (USA) LLC et al., Index No. 603751/09 (N.Y. Sup.)
– Ambac Assurance Corp. v. EMC Mortgage, LLC, Index No. 650421/2011 (N.Y. Sup. Ct.)
– Syncora Guarantee Inc. v. EMC Mortgage Corp., Index No. 09-CIV-3106 (PAC) (S.D.N.Y.)
– Assured Guaranty Municipal Corp. v. DB Structured Products, Inc. et al., Index No.
650705-2010 (N.Y. Sup. Ct.)
– Ambac Assurance Corp. vs. EMC Mortgage LLC, et al., Index No. 651013/2012 (N.Y. Sup. Ct.)
– Ambac Assurance Corp. v. First Franklin Financial Corporation et al., Index No. 651217/2012 (N.Y. Sup. Ct.)
– Ambac Assurance Corp. v. Capital One, N.A. Index No. 12-cv-07937 (MGC) (S.D.N.Y.)
– Ambac Assurance Corp. v. Nomura Credit & Capital, Inc., Index No. 651359/2013 (N.Y. Sup. Ct.)
– Financial Guaranty Insurance Company v. Credit Suisse Securities (USA) LLC, Index No. 651178/2013 (N.Y. Sup. Ct.)
– NCUA v. Morgan Stanley & Co., No. 13-cv-6705 (S.D.N.Y.)
– NCUA v. Credit Suisse Securities (USA) LLC, No. 13-cv-6736 (S.D.N.Y.)
- Implemented a number of servicer terminations and negotiated servicing transfers to improve collateral performance; and
- Implemented amendments to numerous transaction documents to achieve various client objectives.