Mr Cooper Group Inc (COOP)

[David West]

Treatment of Financial Assets Transferred in Connection with a Securitization or Participation

https://www.fdic.gov/news/board/2015/2015-10-22_notice_sum_c_fr.pdf

FDIC Issues Proposed Clarifications to Securitization Safe Harbor Rule

https://www.structuredfinanceinsights.com/updates-news-112.html

The thing to remember about the rules governing securitization and safe harbor is that the rules are slightly different for a corporation in chapter 11, and a seized bank. These rules were different on the date of the seizure of WMB and on the date WMI filed for bankruptcy. There have been several changes since 2008 and, as of the most recent change, the rules are different as of 2015. It would be nice to know all the ins and outs of how the rules work for banks and holding companies - but we do not; and we will never clearly understand the ins and outs without being on the inner circle of the reorganized WMIH.

I think of the seizure of WMB and its sale to JPM as I would one of the many cars I repossessed in my lifetime. If I loaned person X $1k on a car that was worth $10k and later repossessed it, I owed person X some money. If I sold the car for $10k, the law required me to pay person X the difference between the $10k minus what he still owed on the loan and minus my expenses. Although I do not have a link for you to read on this subject, a bank is unlikely to be much different than a car in this respect. If there is value due to us, though we can only guess at what that value is, some entity will return that value to us. Other than the hope that a value exists – forget WMB and all its subsidiaries. It is a done deal and there is absolutely nothing we can change about what happened or about how FDIC-R manages the receivership.

If person Y files a chapter 11 bankruptcy, there may be some trusts involved. Take some time and read-up on revocable and irrevocable trusts during bankruptcies. Some of these trusts (usually irrevocable trusts) are exempt from the bankruptcy proceedings and are exempt from the outcome. During the bankruptcy of person Y, the court ignores these trusts, refusing to allow them any consideration by anyone during the process. Meanwhile, the status, ownership, and management of the trusts remains the same – person Y. During the bankruptcy process person Y submits a plan of reorganization (POR) that the court approves and, except for some housekeeping entities, such as a liquidating trust that liquidates only assets allowed in the bankruptcy and distributes their liquidated value to the appropriate entity, the court declares the bankruptcy finished. Person Y now emerges as reorganized person Z. Person Y is the same person as person Z, only - reorganized. The best part is that the exempt trusts that belonged to person Y during the bankruptcy now belong to person Z. The court never allowed them in the bankruptcy, never will and therefore, the liquidating trust cannot liquidate and distribute their value.

Although the trusts involved here are different and have multiple owners or investors, this type of scenario also applies to WMI – now - WMIH. The management of the relationship between WMIH, the trusts, the accumulated value of the trusts, and any income stream from the trusts, that WMI protected from creditors and protected from the bankruptcy with securitizations and safe harbor, now belongs to the reorganized WMIH – not the former WMI, not the current WMILT, and not the former shareholder.

The number representing the beneficial markers in my TD Ameritrade account is 500,000. The only thing that qualifies me to know is that I would like the process to be like many here envision - that $300B plus will come back through the WMILT and the WMILT will distribute lots of cash to all of us that signed releases. It will not happen that way. It may happen another way, but I doubt that too. If we the shareholders see any value returned to us, it will be an infusion of that value into the reorganized WMIH, increasing its value proportionately.