Commercial Division Blog
Loans Not Identified in Timely RMBS Putback Notice Still Subject to Putback Based on Later Notices, Which Related Back to First Notice
On October 10, 2019, the First Department issued a decision in U.S. Bank N.A. v. DLJ Mtge. Capital, Inc., 2019 NY Slip Op. 07327, holding that loans not identified in a timely RMBS put-back notice were still subject to put-back based on later notices, which related back to the initial, timely notice, explaining:
The written notice sent from plaintiff to defendant dated December 6, 2011, made within the statutory limitations period and well in advance of any lawsuit, informed defendant that a substantial number of identified loans were in breach, and that the pool of loans remained under scrutiny, with the possibility that additional nonconforming loans might be identified. The notice complied with the contractual condition precedent of notifying defendant of its default, such that subsequently identified loans, including the 480 identified by plaintiff's expert during discovery, related back to the time of the initial notice. Since defendant was placed on written notice of breach as to all loans on December 6, 2011, it follows that March 5, 2012 — under the applicable contractual repurchase protocol, the end of the applicable 90-day cure period, at which point defendant was required to repurchase any uncured, nonconforming loans — is likewise the appropriate date of repurchase.
(Internal citations omitted).
Schlam Stone & Dolan represents investors in RMBS actions against underwriters and trustees and in related proceedings, such as trust instruction proceedings where an RMBS trustee seeks court guidance regarding the management of an RMBS trust. If you or a client are RMBS investors and have questions regarding potential claims against a trustee or how to influence the trustee's prosecution of a put back action like the one at issue here, contact Schlam Stone & Dolan partner John Lundin at email@example.com.