Replies to post #520453 on Mr Cooper Group Inc (COOP)

[Large Green]

David West, thank you very much. Makes perfect sense!

[hotmeat]

Nice article with an even more interesting conclusion. As far as we know WAMU SPE's did retain ownership interests, thus making them more likely to qualify for Safe Harbor protections, based on this article.



QUOTE: "The Krol decision is an important decision for participants in the CMBS market. First, the decision is further support that Section 546(e)’s safe harbor provisions apply where financial institutions act simply as a mere conduit for funds. Under the majority approach, as adopted by the Krol court, a financial institution does not need to acquire any ownership interest in the funds in order to qualify for the safe harbor protections. Second, the Krol decision recognizes the economic reality of CMBS transactions, and brings within the protection of Section 546(e) loan payments where the loan has been collateralized. Third, the decision provides more security for CMBS investors since it increases the scope of the safe harbor protections of Section 546(e)."

[Civil War General]

Exactly

[jerrylev]

Excellent article, DW. I cannot find the date of La Salle bank bankruptcy but if the litigation involving the SH assets was in 2015, I assume that La Salle bankruptcy was after WAMU bankruptcy. At some point thereafter, the FDIC changed the rule so that it can seize SH assets. But if La Salle Bank SH assets are protected then we can be confident that WAMU SH assets are protected also.

[jerrylev]

The following is exactly the arrangement between WMI and WMB.

WMI was the trustee, same as La Salle Bank.

WMB was the servicer for the loan, same as Key Bank.

WMI loans were securitized (most of them and we don't know how much).

JPM got only WMB, the servicing part of the loans. The most prized part that JPM got is the banking part along with all the deposits (some or all backed the mortgage loans).

Back in 2008, the bank was the good part of WAMU while the mortgage was the bad part. Now it is probably the opposite. JPM only got the brick and mortar branches that they have to close down most of them.


"In Krol v. Key Bank, N.A., the chapter 7 trustee filed preference and fraudulent transfer claims against Key Bank and LaSalle Bank. At issue were payments made by the debtor on a loan (the “Loan”) extended by a trust (the “Trust”) to an entity related to the debtor. Prior to the bankruptcy, the note evidencing the Loan had been transferred to the Trust as part of a securitization process. Key Bank was the master servicer for the Loan, and held the payments temporarily before transferring them to the Trust. LaSalle Bank was the trustee under the Trust"