Mortgage-Backed Securities
We Don’t Just Understand the MBS Industry, We Believe in It
Confidence. Without it, capital doesn’t move and the economy cannot grow. The financial downturn of 2008 was, in many ways, a crisis of confidence—in property values, underwriting, issuer statements, indeed, in the integrity of mortgage-backed securities (MBS) as a whole. This crisis of confidence has fueled an expanding array of lawsuits and legislative action involving MBS lenders, issuers, servicers and insurers. In this changing legal landscape, an attorney who can explain the structure of MBS is useful, but an attorney who believes in their utility is essential. Whether from investors, shareholders or regulators, the MBS industry is increasingly under fire to defend not just its conduct in the particular, but its efficacy in general. That’s where Andrews Kurth sets itself apart.
Because Andrews Kurth attorneys create them on the front end and defend them on the back end, we have a wealth of knowledge about the mechanics of MBS and their role in the world of real estate markets and capital finance. Andrews Kurth attorneys were among the first to develop residential MBS, and have represented MBS clients in the issuance of tens of billions of dollars in securities. On the litigation front, Andrews Kurth has a team of experienced trial attorneys who have hands-on experience representing a variety of MBS players in litigation and government investigations. We understand that for our MBS clients lawsuits aren’t just about money, they are about restoring confidence in their businesses.
Andrews Kurth’s MBS Task Force is an interdisciplinary group that includes top corporate and real estate lawyers and highly skilled and experienced litigators. Headed by Pat Sargent and Linda Stahl, our MBS Task Force works to protect our clients’ interests and reduce their liability exposure by advising on current legislative requirements, monitoring litigation trends and defending suits. We have represented MBS clients in a variety of matters, including:
- MBS Disputes and Litigation
- Government Investigations
- Counseling and Review of MBS Transactions to assess risk and recommend response
MBS Disputes and Litigation
With our substantial industry experience, Andrews Kurth’s MBS Task Force has the resources to litigate any MBS lawsuit. Our lawyers litigate claims involving allegations of securities violations, misrepresentation and fraud, breach of pooling and servicing agreements, and related matters, including wraparound and mortgage insurance disputes. We also assist clients in responding appropriately and thoughtfully to government subpoenas and similar inquiries. Our MBS Task Force works to counsel clients and identify areas of potential exposure or concern and formulate a plan of action to address those findings.
Our record in MBS industry litigation includes:
- Successfully tried first post-9/11 lawsuit confirming servicer’s authority to enforce lenders’ rights to require borrowers to maintain insurance against acts of terrorism for properties securing loans included within a CMBS pool
- Defended CMBS trustee against fiduciary duty and related claims brought by an investor, obtaining summary judgment dismissing all claims
- Successfully defended claim that financial institution failed to disclose underwriting problems in $144 million pool of mortgages sold to institutional investors
- Successfully defended claim by one financial institution against another that originator of “pooled mortgages” had intentionally withheld material from rating agencies upon which buyer relied
- Represented loan seller in action by special servicer to obtain loan origination documents, resulting in favorable settlement
- Successfully represented trustees and servicers in multiple suits to obtain the appointment of a receiver for defaulted multi-family or hotel properties, eventually facilitating the sale of the properties through the receivers
- Successfully represented various lenders in their efforts to recover on defaulted notes, indemnities and guarantees
Government Investigations
MBS players, particularly originators, servicers, and issuers are seeing an increase in government subpoenas, including those from the Federal Housing Finance Agency. If Andrews Kurth clients receive subpoenas or other investigative demands, the MBS Task Force will work with the client to craft an appropriate response and address client concerns. Representative government investigation matters include:
- Guided loan originator through process of responding to subpoenas in connection with government investigations of MBS products, including Federal Housing Finance Agency
- Represented mortgage banking subsidiary of financial institution in responding to subpoena served by custodian of failed institutional investor seeking rescission of purchase
Industry Experience
Since the very founding of the industry, Andrews Kurth has represented MBS issuers, servicers, and trustees at every point in the lifecycle of these securities. Our MBS industry experience includes:
- Represented mortgage banking subsidiary of national bank as issuer in connection with securitizations of non-conforming jumbo mortgage loans and home equity lines of credit (HELOCs)
- Represented various consumer finance companies as issuer in connection with warehouse financings and securitizations of closed-end home equity loans (including Title I Loans)
- Represented buyer in $2 billion commercial mortgage loan repurchase facility
- Represented Fortune 100 company in commercial mortgage lease-backed securitization of its corporate headquarters
- Represented national loan originators/sellers in commercial mortgage loan origination programs for securitization
