Mortgage Banking Newsletter – November, 2018 – Part II

In this newsletter we cover the following:

Mortgage Banking Litigation Webinar: JT to Host Complimentary LBHI Litigation Webinar
Complimentary Recordings and PPTs Available from JT’s Recent Webinars
The Legal Services we offer at Johnston & Associates

Welcome to the November Installment of JT’s Newsletter, Part II

To all our preexisting clients, industry friends and strategic partners whom are in receipt of the Johnston & Associates Newsletter, as well as any and all the new readers whom have decided to subscribe hereto, we welcome and thank you for taking the time to read about those topics that we believe to be of great importance to the mortgage banking industry in which we all are fortunate enough to be a part of and to those mortgage banking professionals whom we count ourselves lucky to work alongside.

In this supplement to our recent November installment of our newsletter, we are pleased to announce a complimentary lender only webinar whereby we will impart invaluable information regarding the new wave of RMBS lawsuits filed by Lehman and which our office is representing one of the largest groups, or one of the largest groups, of RMBS defendants (i.e., Johnston & Associates – LBHI defense team). In addition, included herein, we have provided links to access our most recent regulatory compliance webinar on marketing service agreements or MSAS, as well as prior webinars on loan officer compensation, repurchase and make-whole defense strategies, and mergers/acquisitions.

Next, as many of you already know, the professionals who comprise Johnston & Associates’s Mortgage Banking Practice Group represent our clients in matters that include, but are not limited to, repurchase and make-whole lawsuits, Servicer litigation, third-party mortgage fraud litigation, appeals to HUD’s Mortgagee Review Board, preparation of policies and procedures, creation of Loan Officer Compensation plans, formation of Marketing Service Agreements, assisting with the negotiation and review of Broker and Correspondent LPAs, and much, much more.

Finally, as part of our ongoing effort to provide our readers with content rich Newsletters, including timely discussions on those topics that are of great concern and interest to many within our industry, we always welcome any and all follow-up questions and/or feedback that you and/or your companies may have.

Johnston & Associates to Host Complimentary Lender Only Webinar, Entitled: “Lehman Bros. GSE and RMBS Litigation: A Comprehensive Review and Analysis”

Date: Thursday, December 13, 2018 (re-scheduled from original November 29 date)
Time: 10:30 a.m. PST / 1:30 p.m. EST
Duration: One Hour

As most of the industry is now aware, Lehman Bros. Holdings, Inc. (“LBHI”) filed numerous adversary complaints against mortgage lenders and brokers, in the New York Bankruptcy Court (“Court”) alleging indemnification claims relating to LBHI’s settlements with RMBS Trustees. The purpose of this complimentary webinar is to provide all our clients, as well as all those lenders who may be forced to defend against claims by LBHI, invaluable information on the history of the LBHI litigation, the legal arguments LBHI has made in support of its claims, the legal arguments that the defendants have made, the Court’s decisions on the legal issues, strategies to address the situation where your company has either wound down or will be forced to do so, and some general considerations to take into account as the GSE and RMBS cases proceed.

With regard to the RMBS litigation, LBHI is demanding indemnification for allegedly defective mortgages in connection with its recent $2.38 billion settlement with private-label RMBS Trustees. The complaints are copycat templates that provide little defendant-specific information beyond a list of loan numbers, abbreviated reasons for the claims (e.g., “Document”, “U/W”, “Employment Misrep”, etc.), and LBHI’s related claim for damages. In many cases, while LBHI seeks to recover damages in the low-to-mid seven figure range, LBHI has madesome demands in the low eight figures. Although none of the RMBS Defendants are presently able to conduct any sort of meaningful investigation into the loans and related damages that LBHI claims to be at issue, it is important to keep in mind that the litigants will soon be able to obtain the information necessary to identify the actual loan numbers at issue, obtain information and documentation for those loans that may have been purged due to the expiration of the retention period, that LBHI’s demands are likely inflated based on several faulty assumptions we believe it has used, and that the defendants will assert a number of very strong factual and legal defenses necessary to mount a comprehensive defense.

At the most recent hearing, the Court granted LBHI’s motion for leave to file a third amended complaint against certain defendants as to whom LBHI had previously filed GSE Claims. In addition, with regard to the motion to amend and extend the prior ADR procedures to cover RMBS related indemnification claims, Judge Chapman confirmed she would and now has issued one order for the non-objecting parties and had directed the objecting parties to work out individual ADR deals with LBHI. The upshot is that all the objecting clients will receive some level of preferential treatment.

Although we have seen some recent solicitation emails from other firms that have been handling some of the earlier GSE cases and that have talked about their successes, most or all of them have asserted the same general legal theories as everyone else had to date and, aside from obtaining dismissals through settlements, we are not aware of any law firm that has been able to prevail in getting their clients out over the last couple of years. Although Judge Chapman had recently denied all of the prior motions to dismiss the GSE lawsuits, which were based on the statute of limitations (“SOL”) and other legal arguments, none of the new RMBS Defendants have had had their own opportunity to test these issues as of yet. Fortunate for us, while such is not likely to change the Court’s position on the SOL arguments that have been and continue to be made, the NY Court of Appeals just issued a new decision a few weeks ago that bolsters one of SOL cases that has been heavily cited by defendants to date. (See https://www.nycourts.gov/ctapps/Decisions/2018/Oct18/96opn18-Decision.pdf)

Insofar as how the court will manage the preexisting GSE related claims with the new RMBS claims, the court has indicated that the GSE claims will be handled separate from the RMBS claims. In other words, even if you decided to join a defense group that is handling many GSE related cases, you may not benefit that much due to the RMBS claims being handled separately from the GSE cases. However, given the fact that our office is again representing one of the largest groups of defendants, with RMBS and/or GSE claims, all our clients will enjoy an economy of scale in the defense of their matters. Further, as there are different response dates depending upon whether you are an adversary defendant, a recipient of an ADR notice, or both, it is critical you understand all of your rights and obligations.
Once again, in this complimentary lender only webinar, we will go over all of the foregoing issues in greater detail and, at the end, will address any follow-up questions that you may have, either during the webinar or a supplemental FAQ.

Moderator and Speaker:
James Brody, Esq., Chairman of Mortgage Banking Practice Group

Additional Speakers:
Ryan F. Thomas, Esq., Shareholder
Ingrid Peterson, Esq., Co-Chair Mortgage Banking Practice Group
Robert Weiss, Esq., Senior Litigation Attorney
And more TBA

In order to register for this complimentary webinar, which will be limited to the first 1,000 registrants, please CLICK HERE. Otherwise, should you have any follow-up questions regarding the upcoming webinar or if interested in finding our more about the Johnston & Associates LBHI Defense Group and how such can benefit your companies, please contact Mr. James Brody. After registering, you will receive a confirmation email containing information about joining the webinar.

Complimentary Webinar Recordings and Presentation Materials Available from Johnston & Associates Mortgage Banking

We are pleased to offer complimentary recordings and other presentation materials from our recent webinars:

October 18, 2018 – “Compliance Tips and Trends: The Resurgence of Marketing Service Agreements, Affinity Relationships, Joint Ventures and Affiliated Arrangements” webinar
July 26, 2018 – “Loan Officer Compensation Tips and Trends: How to Gain a Competitive Edge While Remaining Compliant” webinar
June 28, 2018 – “Repurchase and Indemnification Claims in 2018 and Beyond: A Comprehensive Update” webinar
May 10, 2018 – “Mergers and Acquisitions in the Mortgage Banking Industry: Expert Insights and Forecasts for 2018 and Beyond” webinar

These materials may be downloaded from our Johnston & Associates website or, for more information concerning any of the foregoing webinars and/or the subject matter of these webinars, please contact its Chairman James Brody.

Legal Services Offered by Johnston & Associates in the Mortgage Banking Industry

Johnston & Associates is a full suite boutique law firm, which amongst other practices such as real estate and commercial litigation, has a nationally recognized Mortgage Banking Practice Group. With an experienced team of mortgage banking lawyers (including senior litigation attorneys, former in-house General Counsel and in-house Compliance Counsel from a well-known bank and mortgage company, etc.), certified fraud examiner and forensic underwriters, and an extremely competent support staff, all of whom are dedicated to aggressively and competently serving the needs of our valued clientele, Johnston & Associates’ Mortgage Banking Practice Group is known all across the country for the experience and results that it brings to the areas of regulatory compliance, mortgage banking litigation, and a broad range of mitigation services.

Amongst the many legal services Johnston & Associates offers the mortgage banking industry (e.g., brokers, lenders, servicers, vendors and more), such include, but are in no way limited to, as follows:

Mortgage Repurchase and Make-Whole Indemnification Litigation and Mitigation (e.g., Secondary Market Investors, Agencies, etc.)
Mortgage Industry Litigation (e.g., Servicer and Sub-Servicer Disputes, 3rd Party Fraud Recovery, CPL and Title Policy Actions, Appraiser E&O Claims, Loan Officer Actions, etc.
Mortgage Repurchase and Make-Whole Alternative Dispute Resolution (e.g., Arbitration, Mediation, etc.)
Regulatory Compliance, Administrative and Business Services (e.g., Mock Audits, LO Compensation, MSAs, Licensing, CA Dep’t of Business Oversight, HUD Review Board, etc.)
Transactional Matters (e.g., Drafting and Negotiating Broker and Correspondent Loan Purchase Agreements, Mergers & Acquisitions, etc.)

Should you have any questions regarding how Johnston & Associates’ Mortgage Banking Practice Group can be of assistance to you and/or your company, please contact its Chairman James Brody and/or its Co-Chair Ingrid Peterson.

Although this communication may contain or possibly be considered attorney advertising, it is meant to be for informational and commentary purposes only. As such, it is not intended as legal advice and does not create an attorney-client relationship. Because of the generality of this update, the information and opinions provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations. All opinions expressed herein are solely the opinion of the individual author and do not necessarily reflect the opinions of Johnston & Associates Law Firm, its attorneys, or any other individual.

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