On September 25, Judge Jed S. Rakoff of the Southern District of New York issued a written opinion denying summary judgment in Assured Guaranty Municipal Corp.’s contract dispute with Flagstar Bank FSB over its insurance policies on nearly $1 billion in mortgage-backed securities backed by home equity loans. Assured initiated this action in April 2011, alleging that Flagstar breached representations and warranties concerning the underwriting guidelines used to originate the mortgages, the credit characteristics of the loans, and the absence of negligence or fraud in the origination process. Assured alleges that many of the loans have defaulted, resulting in $82.4 million in claims paid to date. In denying Flagstar’s summary judgment motion, Judge Rakoff found that Assured need not demonstrate loss causation – that is, that the representation and warranty breach caused the loan to default and caused Assured to suffer damages – but rather that Assured could prevail if it proves that the representation and warranty breach materially increased the risk of loss to Assured. Trial in this matter is scheduled for October 9. Judge Rakoff’s ruling is similar to that of Judge Paul Crotty in Syncora Guarantee Inc. v. EMC Mortgage Corp., a decision covered in the June 25 issue of the Week in Review. Order.
Since FATCA’s enactment in March 2010, the IRS has issued several rounds of guidance and the proposed implementing rules are evolving considerably as the Treasury and the IRS continue to consider comments received from various stakeholders. However, the Proposed Regulations have been much anticipated by taxpayers that may be affected by the FATCA withholding tax regime and they provide a clearer insight into the possible contours of final regulations to be adopted, as well as some welcome relief in certain areas. Click here to read more.
On April 4, U.S. District Court Judge Collyer approved the previously announced consent judgments resolving claims by by the DOJ and 49 state AGs against Ally, Bank of America, Citi, JPMorgan and Wells Fargo relating to alleged mortgage servicing and foreclosure practices. Ally Financial Consent Judgment. Bank of America Consent Judgment. Citigroup Consent Judgment. JP Morgan Consent Judgment. Wells Fargo Consent Judgment.
On November 29, 2011, the Financial Guaranty Insurance Co. (“FGIC”) filed three lawsuits in New York state court against the mortgage divisions of Ally Financial. FGIC alleged that GMAC and the Residential Funding Company misrepresented to FGIC the quality of loans underlying RMBS valued at $3.8 billion in order to obtain insurance policies from FGIC that were purportedly necessary for the RMBS to be given a AAA credit rating. FGIC’s insurance policies guaranteed principal and interest payment on the securities at issue. FGIC asserts a number of causes of action in each case, including claims for various contractual breaches, fraudulent inducement, and tortious interference. Complaint A. Complaint B. Complaint C.
The Financial Times names Orrick among the top five law firms overall in its recently published 2011 FT Law 25: Most Innovative US Law Firms report. The FT Law 25
recognizes firms that consistently “create transformative solutions for clients” and is
based on client feedback and independent research. The top five firms include Davis Polk, Skadden, Cleary Gottlieb, Orrick and Latham & Watkins.
The FT report also names Orrick’s work on Redwood Trust’s 2011 public offerings of private-label mortgage-backed securities among the most innovative financings of 2011. The FT reports: “the firm’s understanding of the evolving regulations and regulators helped restart this industry sector.”
Additionally, Orrick is the only law firm to advise on three of the most innovative Energy Sector deals.
This achievement is a testament to the market leadership of our clients – we thank our clients for continuing to entrust us with their most innovative deals.
On November 1, pursuant to Section 316 of the Dodd-Frank Act, the OCC released an issuance revising the procedures for national banks to appeal agency decisions and actions to include federal savings associations. Issuance.
On August 31, the California Supreme Court declined to review the Court of Appeal’s decision in Lincoln Life and Annuity Co. v. Berck, commonly referred to as the Teren case. Click here to read more.
On July 14, 2011, the United States Court of Appeals for the Eighth Circuit issued a decision that will adversely affect the legal rights of premium finance lenders and investors in life settlements originated in Minnesota. For a complete summary of the ruling, please click here.
On April 14, Representative Steve Stivers introduced a bill to reinstate Rule 436(g) of the Securities Act. The bill would repeal Section 939G of the Dodd-Frank Act, under which Section 436(g) was repealed. The reinstatement of Rule 436(g) would exclude NRSROs from being treated as “experts” when their ratings are included in a registration statement. A copy of the bill will be posted on Thomas.
Orrick has developed an Attorney General Post-Election Reference Guide to assist clients in learning about the Attorneys General (AGs) in all 50 states and the District of Columbia, including the 19 new incoming AGs. This past election was one of great significance because more than ever before in our nation’s history, AGs are recognized for playing an increasingly powerful and multifaceted role in their states. Guide.
**Due to inaccuracies in the previous version of the Guide, an updated guide is now available. For more information, please contact Lori Kalani.