On September 22, 2016, RMBS Trustee U.S. Bank National Association (“U.S. Bank”) and loan originator WMC Mortgage LLC (“WMC”) filed a stipulation of dismissal in four RMBS lawsuits in light of a settlement reached between the parties. The details of the settlement are not publicly available. The settlement resolves three lawsuits initiated by U.S. Bank, alleging that WMC misrepresented the quality of loans it sold in 2006 and 2007 RMBS offerings, as well as a lawsuit brought by WMC against U.S. Bank, seeking a declaratory judgment regarding WMC’s performance under the governing agreements of an RMBS deal. Two of U.S. Bank’s lawsuits include claims against loan originator Equifirst Corporation, but these claims are not part of the settlement. Stipulation of Dismissal.
WMC
Minnesota Federal Court Dismisses, In Part, Put-Back Claims Against Mortgage Originators
On September 30, a Minnesota federal judge granted in part and denied in part WMC’s and EquiFirst’s motions to dismiss three suits brought by U.S. Bank, as Trustee for an RMBS trust, alleging that WMC and EquiFirst breached representations and warranties in the purchase agreements relevant to each securitization. As to U.S. Bank’s breach of contract claims, Judge John R. Tunheim concluded that the contracts’ sole remedy provisions barred claims for monetary damages and limited the Trustee to specific performance of the contractual repurchase provision. The court also granted the motions to dismiss with respect to the Trustee’s claims for contractual indemnification and declaratory relief. However, Judge Tunheim denied the motion to dismiss the Trustee’s claim that the defendants were liable as a result of their failure to notify the Trustee of breaches when the defendants discovered them. The court also permitted the Trustee’s claim for damages based on gross negligence to proceed. Finally, in the same order the court granted, in part, WMC’s motion for summary judgment in a fourth related action. Opinion.