Mr Cooper Group Inc (COOP)

[David West]

The Receivership (FDIC-R).


(From) OVERVIEW OF THE FDIC AS CONSERVATOR OR RECEIVER

C. Priority of Claims

1. FDIC Depositor Preference

Link: http://blogs.law.harvard.edu/corpgov/files/2008/10/092608-overview-fdicasconvervator-receiver.pdf

Under the FDI Act, insured depositors are covered by FDIC deposit insurance (with the FDIC as subrogee taking the place of those depositors), claims of FHL Banks receive priority treatment, and secured claims are satisfied based upon the governing security documents. As the term suggests, "depositor preference" elevates the claims priority of depositors over unsecured creditors. Under these provisions, claims are paid in the following order:

1. Administrative expenses of the receiver,

2. Deposit liability claims (the FDIC claim takes the position of the insured deposits),

3. Other general or senior liabilities of the institution,

4. Subordinated obligations, and

5. Shareholder claims.


2. Bankruptcy Law Priorities

1. Any secured claims...

2. Administrative claims...

3. Priority claims in a specified order...

4. Allowed unsecured claims...

5. Subordinated claim...

6. Shareholder claims, generally in the order of priority as between shareholders. (Priority being the order of the tranches in WMILT).


a. Safe Harbor

The goal of the FDIC in addressing the legal isolation concern was succinctly stated by the FDIC’s General Counsel in Financial Institution Letters issued in conjunction with the proposed rule and the final rule as adopted: If the transferred assets [in a securitization or loan participation] are not sufficiently isolated from the insured bank or thrift, its creditors or the receiver, the transfers would not qualify for sale treatment under GAAP and the transferred assets would continue to be reported as assets on the transferor] institution’s balance sheet.
The rule responds to those questions by reassuring interested parties that, subject to certain conditions such as fraud, the FDIC - as conservator or receiver - will not seek to reclaim, recover or recharacterize as property of the institution or the receivership financial assets transferred by the institution in connection with a securitization or participation. Accordingly, the rule should resolve the legal isolation issue for insured depository institutions. The rule confirms existing FDIC practice in dealing with securitization and participation transactions.

(Lenders moor assets (loans) in Safe Harbor routinely before seizure or bankruptcy.)

(From) JPMorgan Chase Notices relating to Washington Mutual Whole Bank P&A

Link: https://www.fdic.gov/about/freedom/wsj-responsiverecords.pdf

What does “substantial claims” mean, and do claims by WMI against the receivership still exist?

Page 2 of the third document: 6. We understand that WMI and its creditors (and possibly stockholders), as well as WMB’s creditors, have submitted substantial claims in the FDIC’s receivership claims process. To the extent that any such claims were to affect or damage JPMC, we would be entitled to indemnity.