Replies to post #496605 on Mr Cooper Group Inc (COOP)

[Theoaktree2017]

That's amazing face value $1,000 + 9 year interest that's not enough for you guy greedy greedy greedy

[hotmeat]

The Safe Harbor issue has been IMO misinterpreted as to how such Assets would be viewed in the bankruptcy process. From the excerpt below it is clear that the FDIC cannot seize and sell said Assets to satisfy Receivership claims. The Assets are therefore recognized by the Receivership BUT by law, the FDIC must protect them from liquidation. In the bankruptcy process, these Assets would not be accounted for since they are "Bankruptcy Remote" (not "Receivership Remote"). Once the Receivership process is completed, these Assets will have to be returned to the parties who hold interests. IF WMI is one of those parties, as we believe, this process of returning Assets will be governed solely by the GSA/POR Agreement. This is the sole agreement made between the Debtors, FDIC-C/R and JPM, and as such will dictate how any transaction between these parties will proceed. To state that Safe Harbored Assets do not fall under the purview of the GSA/POR is IMO incorrect.








Quoted from a Morrison & Foerster Bulletin

The FDIC originally adopted the Securitization Rule in 2000 to provide comfort that loans or other financial assets transferred by an IDI into a securitization trust or participation would be “legally isolated” from an FDIC conservatorship or receivership if, among other requirements, the transfer met all conditions for sale accounting treatment under generally accepted accounting principles (“GAAP”).

At the same time the original Securitization Rule was adopted by the FDIC, that accountants have a reasonable basis for concluding that securitized assets have been legally isolated from the sponsor. Quite apart from the technical accounting purpose, the Securitization Rule has provided investors and credit rating agencies with substantive comfort that securitized assets WILL NOT be reclaimed by the FDIC in conservatorship or receivership of an IDI sponsor.
(Edit: Stated Assets "will not be reclaimed" rather than "not be Recognized" in a Receivership.)

Securitization participants have thus relied for a decade on the Securitization Rule as a safe harbor for assurance that investors could satisfy payment obligations from securitized assets without fear that the FDIC might interfere as conservator or receiver.