GreenPoint Mortgage Funding

SDNY Grants Defendant GreenPoint Mortgage Summary Judgment

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On March 29, 2017, Judge Andrew L. Carter, Jr., of the United States District Court for the Southern District of New York granted Defendant GreenPoint Mortgage Funding, Inc.’s (“GreenPoint“) motion for summary judgment, dismissing all causes of action against it as time-barred and terminating the case in Lehman XS Trust et al. v. GreenPoint Mortgage Funding, Inc.

Plaintiff Trustee U.S. Bank National Association, on behalf of the Lehman XS Trust, Series 2006-GP2 (“GP2“), Lehman XS Trust, Series 2006-GP3 (“GP3“), and Lehman XS Trust, Series 2006-GP4 (“GP4“) (collectively, the “Trusts“), and Freddie Mac Conservator Federal Housing Finance Agency (collectively, “Plaintiffs“) brought consolidated claims against GreenPoint regarding GP2, GP3, and GP4. Plaintiffs alleged breach of contract and indemnification claims for specific performance and damages arising out of GreenPoint’s alleged breach of certain representations and warranties.

Citing N.Y. C.P.L.R. § 214(3), the Court first found that Plaintiffs’ breach of contract claims under the mortgage loan purchase agreements (“MLPA“) for all three Trusts were time-barred under New York state’s six-year statute of limitations for breach of contract actions. The Trusts’ respective MLPAs required GreenPoint to cure or repurchase the defective loans in the event that any of the mortgage loans breached these representations and warranties. The closing dates for the Trusts were as follows: GP2 on May 15, 2006; GP3 on June 15, 2006; and GP4 on July 17, 2006. FHFA filed summons with notice for GP2 on May 30, 2012; for GP3 on June 29, 2012; and for GP4 on July 30, 2012.

Judge Carter then rejected Plaintiffs’ indemnification claims arising out of GreenPoint’s alleged breaches of representations and warranties. Plaintiffs sought indemnification for its losses, costs, fees, and expenses arising out of and related to the breaches of GreenPoint’s representations and warranties. Since Plaintiffs did not face liability to a third party as a result of the alleged breaches, the Court held that Plaintiffs’ indemnification cause of action was “more appropriately characterized as one to recover losses incurred by breach of contract” and therefore also barred by the statute of limitations.

Finally, the Court dismissed as time-barred Plaintiffs’ newly alleged causes of action for breach of GreenPoint’s representations and warranties made in the Trusts’ Indemnification Agreements, which provide for indemnity to the Trusts and other entities for claims arising out of breaches of the representations and warranties made in the information provided by or on behalf of GreenPoint for inclusion in the Prospectus Supplements. Opinion.

First Department Affirms Partial Dismissal of RMBS Repurchase Claims

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On December 29, 2016, the New York Supreme Court, Appellate Division, First Department, in a 4‑1 decision, affirmed a 2015 New York Supreme Court order dismissing certain claims in an RMBS action brought by Trustee U.S. Bank National Association, solely in its capacity as Trustee of the J.P. Morgan Alternative Loan Trust 2007-A2 (the “Trustee“) against originator Greenpoint Mortgage Funding (“Greenpoint“). On May 31, 2013, the last day before the statute of limitations expired, the Trustee filed suit alleging that Greenpoint had breached certain representations and warranties with respect to mortgage loans that it originated. The Trustee, however, did not send out any breach notices until after it filed its action, and none of the breach notices provided for a 60‑day cure period, as required under the applicable Mortgage Loan Sale Agreement. The First Department affirmed the Supreme Court’s order dismissing the Trustee’s claims that Greenpoint was notified of breaching mortgages, but failed to cure. The panel held that the breach notices and the 60‑day cure period were conditions precedent to filing the lawsuit, and the breach notices could not “relate back because the inherent nature of a condition precedent to bringing suit is that it actually precedes the action.” The First Department, however, also affirmed the Supreme Court’s denial of Greenpoint’s motion to dismiss to the extent that the Trustee’s breach of contract claims were predicated on allegations of Greenpoint’s independent discovery of breaches. The First Department held that such allegations do not require breach notices to be sent before an action is commenced. The panel also held that allegations that Greenpoint created and had full access to the loan files, and therefore knew or should have known of the breaches, were sufficient to withstand a motion to dismiss. Order.

Lehman Estate Settles Claims By RMBS Insurer and Trustee

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On September 20, 2016, Judge Shelley Chapman of the U.S. Bankruptcy Court for the Southern District of New York approved the $37 million settlement of $1.3 billion in claims asserted against the estates of two defunct Lehman Brothers’ entities by Syncora Guarantee Inc. in its capacity as the insurer for certain certificates issued from the GMFT 2006-1 RMBS trust. After being sued by the GMFT 2006-1 Trustee for payment under the insurance policy, Syncora filed its own claim for indemnification against Lehman as sponsor of the securitization. In addition to settling Syncora’s claim, the agreement also releases Lehman from all potential claims brought by the GMFT 2006-1 Trustee, U.S. Bank NA, in exchange for Lehman’s cooperation in a separate lawsuit arising from GreenPoint Mortgage Funding Inc.’s alleged failure to repurchase defective loans. Settlement Order. Settlement Agreement Submitted For Approval.