The big, big lawyers are fighting out a question that anyone involved in WAMU/JPMorgan litigation cases should be asking. The fundamental issue is JPMorgan made a “whole bank” purchase of WAMU assets, through the FDIC. But what exactly was included in the “whole bank”?
Regarding individual loans that WAMU was servicing and maybe even holding onto original promissory notes, the allegations made by the big boys and girls in their legal skirts and suits is that WAMU didn’t actually own all those notes.
On a much bigger level, I don’t think JPMorgan inked this deal without cutting a side deal, something along the lines of a loss share agreement that makes FDIC/taxpayers pay for many of the known “losses” they would incur in the deal. Here are the outlines:
Plaintiff Deutsche Bank National Trust Company, as Trustee for the Trusts listed inExhibits 1-A and 1-B of the Amended Complaint (” DBNTC” or the ” Trustee”) respectfully submits this memorandum of law in opposition to: (i) FDIC Receiver’s Motion to Dismiss datedNovember 22, 2010; (ii) JPMorgan Chase Bank, National Association (” JPMC”) andWashington Mutual Mortgage Securities Corporation’s (” WMMSC”) motion to dismiss datedNovember 22, 2010; and (iii) JPMC and WMMSC’s motion for partial summary judgment datedNovember 22, 2010.
Each Trust is governed by a set of interrelated executory contracts and agreements memorializing the rights, interests, liabilities andcontinuing obligations of the contracting parties (the ” Governing Documents”). AC ¶ ¶ 29-30.All of the Governing Documents were maintained in the books and records of WaMu, and weretransferred to JPMC in connection with its acquisition of WaMu. AC ¶ 42.The Governing Documents typically include a mortgage loan purchase agreement(” MLPA”), which effectuates and governs the conveyance of mortgage loans from the sponsor orSeller to the Depositor, and/or a pooling and servicing agreement (” PSA”), which generallygoverns the rights and obligations of, among others, the Trustee and Servicer of the Trusts. AC ¶29. The MLPAs and/or PSAs for the Primary Trusts, and the relevant agreements for theSecondary Trusts, contain representations, warranties and covenants made by WaMu, as Sellerand/or Depositor, regarding the nature, characteristics, history and quality of the mortgage loansand the mortgage loan files sold to, and deposited in, the Trusts (the ” Representations and Warranties”). AC ¶ ¶ 30, 45-48. A representative sample of the Representations and Warrantiesis set forth in Paragraph 46 and Exhibit 5 of the Amended Complaint. As detailed in Section Cinfra, the Governing Documents contain ongoing contractual obligations by WaMu to notify theTrustee upon discovery of loans that breach the Representations and Warranties and torepurchase any loans not in compliance with the Representations and Warranties. This case isabout breaches of those ongoing notice and repurchase obligations, as well as the ongoing breachof the Trustee’s contractual right to access the loan files.
And this here