Mr Cooper Group Inc (COOP)

[deekshant]

Off-Balance Sheet Retained Earnings

With regards to WMI, here is one in support. Also BK, were you able to look at the case cited in defense where the judge Denise Cote did in fact reach a conclusion that JPM did actually assume liabilities on securitizations.

WMI-10K Page 47
Off-Balance Sheet Activities and Contractual Obligations Asset Securitization

The Company transforms loans into securities through a process known as securitization. When the Company securitizes loans, the loans are usually sold to a qualifying special-purpose entity ("QSPE"), typically a trust. The QSPE, in turn, issues securities, commonly referred to as asset-backed securities, which are secured by future cash flows on the sold loans. The QSPE sells the securities to investors, which entitle the investors to receive specified cash flows during the term of the security. The QSPE uses the proceeds from the sale of these securities to pay the Company for the loans sold to the QSPE. These QSPEs are not consolidated within the financial statements since they satisfy the criteria established by Statement No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities. In general, these criteria require the QSPE to be legally isolated from the transferor (the Company), be limited to permitted activities, and have defined limits on the types of assets it can hold and the permitted sales, exchanges or distributions of its assets.

When the Company sells or securitizes loans that it originated, it generally retains the right to service the loans and may retain senior, subordinated, residual, and other interests, all of which are considered retained interests in the sold or securitized assets. Retained interests in mortgage loan securitizations, excluding the rights to service such loans, were $1.71 billion at December 31, 2007, of which $1.56 billion are of investment grade quality. Retained interests in credit card securitizations were $1.84 billion at December 31, 2007, of which $426 million are of investment grade quality. Additional information concerning securitization transactions is included in Notes 7 and 8 to the Consolidated Financial Statements – "Securitizations" and "Mortgage Banking Activities."
www.secinfo.com/dVut2.t21c.htm#1stPage

"...Because of the uncertainty that the FDIC’s repudiation authority would otherwise cause
concerning securitization contracts, in 2000 the FDIC adopted a legal isolation safe harbor (the “Securitization Rule”), codified at 12 CFR 360.6, providing that it would not use its repudiation authority to recover assets transferred in a securitization as long as such transfer constituted a sale under generally accepted accounted principles (“GAAP”). In order to achieve sale treatment under Financial Accounting Standard (“FAS”) 140, the transfer required: (i) that the assets be isolated from the transferor, beyond the reach of its creditors in either bankruptcy or receivership; (ii) that the transferee be able to pledge or exchange any interest it receives in the assets; and (iii) that the transferor not maintain control over the transferred assets..."
apps.americanbar.org/buslaw/newsletter/0090/materials/pp1a.pdf