Joel I. Sher, Chapter 11 Trustee and Zuni Investors LLC v Countrywide Home Loans Inc and BofA (Adversary case 11-00337)
[edited]
INTRODUCTION
This is an action for breach of two Mortgage Loan Purchase and Servicing Agreements (the MLPSAs) under which defendant Countrywide Home Loans, Inc. sold residential mortgage loans that were eventually deposited into Zuni Mortgage Loan Trust 2006-OA1, a securitization trust. In each MLPSA, Countrywide made numerous representations and warranties about the mortgage loans. Plaintiffs have investigated the true condition of the mortgage loans and have discovered that Countrywide breached those representations and warranties with respect to many of the loans. Plaintiffs sent a letter demanding that Countrywide (1) repurchase the loans with respect to which Countrywide breached representations and warranties and (2) provide Plaintiffs with the mortgage loan files for the loans for which Plaintiffs do not have the loan files so that Plaintiffs may assess whether Countrywide breached representations and warranties with respect to additional loans. Countrywide has not repurchased the loans or provided the loan files.
DEMAND FOR RELIEF
Therefore, Plaintiffs demand judgment against the Defendants Countrywide Home Loans, Inc. and its successor Bank of America Corporation, for specific performance of their obligation to repurchase the loans under Section 3.3(c) of the Thornburg MLPSA and Section 7.03 of the Greenwich MLPSA with respect to the loans identified in Exhibits 3 and 5 to this Complaint, and with respect to all other loans sold under the Thornburg MLPSA or the Greenwich MLPSA as to which Countrywide breached one or more of their representations and warranties under the MLPSAs, or in the alternative, for damages in an amount to be determined at trial, with interest. Plaintiffs also demand judgment against Countrywide Home Loans, Inc. for specific performance of its obligation to provide access to loan files under Sections 4.1 and 5.6 of the Thornburg MLPSA and Section 6.02 of the Greenwich MLPSA. Plaintiffs also demand an award of the costs and expenses of maintaining this action on behalf of the trusts, including reasonable attorneys and expert fees.
Having worked in Correspondent Lending for nearly six years and more recently worked with our clients on "reps and warrants" issues that the GSE's found, I believe repurchase can be successful if the documentation is defective.
I think the defendants will eventually settle, which means the chances of equity receiving any value in the Chapter 7 case remains remote.
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