Philip R. Stein

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A Glut of “Opportunistic” Margin Calls: Are Creditors Moving Too Quickly to Seize Assets?

What can companies expect from their funding sources as COVID-19 does damage to the economy? In at least some instances, perhaps, opportunistic attempts by lenders to illegally take control of business assets. A real estate investment trust (REIT) in New York alleges in a new lawsuit that it has already fallen victim to that type … Continue Reading

Coronavirus and the Next Possible Financial Crisis: Corporate Debt

As the world grapples with the health threat posed by the novel coronavirus (COVID-19), the secondary threats of the coronavirus—including economic and financial consequences—have come into clear view. Markets in the United States and the broader world tanked last week, including the worst day for the Dow Jones Industrial Average since “Black Monday,” October 19, … Continue Reading

RMBS Litigation Relating to Loans Sold Prior to 2008: Are We Finally Nearing The End?

The years since the 2007–2008 financial crisis have been marked with milestone settlements of claims against the major mortgage “aggregators” (sometimes also known as “investors” in the mortgage purchasing context), who then became “securitizers” or “sponsors” with respect to the loans that they purchased. In the years immediately following the crisis, aggregators often first faced … Continue Reading

With Consumer Protection Class Actions On the Rise, Is the Financial Services Industry in the Crosshairs?

Lawyers or business people who feel they have been hearing about a lot more consumer protection class actions lately have good reason for that feeling. A recent report by Lex Machina, part of LexisNexis, highlights an extraordinary increase in federal consumer protection class actions over the last decade. The number of such class actions almost … Continue Reading

Appellate Court Tells CitiMortgage It Can’t Force “Repurchase” Of What No Longer Exists

A recent decision by the United States Court of Appeals for the Eighth Circuit offers some vindication for mortgage companies still facing “repurchase” demands made by the banks to which they sold residential mortgages in the years leading up to the financial crisis that began in 2007 and accelerated in 2008.  In CitiMortgage, Inc. v. … Continue Reading

Jurisdictional Lessons from Mt. Gox Cryptocurrency Litigation

Last week, on the heels of a significant decline in Bitcoin prices, Forbes reported that China’s Central Bank is set to launch the world’s first state-backed cryptocurrency. The cryptocurrency will be made available initially to seven of China’s largest financial institutions, including three banks and two financial technology companies (including Alibaba).  It is planned to … Continue Reading

CFPB Decision on “GSE Patch” Revives Debate About Prudent Underwriting

The Consumer Financial Protection Bureau (CFPB) recently announced that it will allow the so-called “GSE patch” to expire in January 2021.[1] This patch permits Government-Sponsored Entities Fannie Mae and Freddie Mac to buy loans even though the borrower’s debt-to-income (“DTI”) ratio exceeds the standard limit of 43%.[2] The CFPB’s decision revives a long-standing debate about … Continue Reading

From RMBS to SLABS: Is History Repeating Itself?

The fallout from the last financial crisis and recession is far from over. More than a decade after the demise of Lehman and Bear Stearns, among others, litigation continues related to alleged deficiencies in mortgage loans securitized as part of residential mortgage-backed securities (RMBS) offerings. Our firm thus remains extremely busy with, for example, defense … Continue Reading

New Second Circuit Statute of Limitations Ruling A Benefit to Loan Originators, Brokers

As originators and brokers of mortgage loans continue to get served with new lawsuits (or threatened with potential suits) related to loans that they conveyed to aggregators prior to the financial crisis of 2008, questions almost inevitably arise as to how this is even possible: aren’t such claims time-barred under the applicable statute of limitations? … Continue Reading

New York High Court Rules on Statute of Limitations

Over the last several years, we have posted several times about whether the statute of limitations bars remedies against lenders (and sometimes sponsors and trustees) of residential mortgages. (See here, here, and here). One of the most important cases in this area has been ACE Sec. Corp., Home Equity Loan Trust, Series 2006–SL2 v. DB … Continue Reading

Lehman Brothers Seeks to Expand Lawsuits Against Loan Originators

Last week, Lehman Brothers Holdings Inc. (“LBHI”) filed two new motions in its ongoing Southern District of New York Bankruptcy Court litigation against approximately 130 loan originators and brokers: (1) an Omnibus Motion for Leave to File Third Amended Complaints Pursuant to Rule 7015 of the Federal Rules of Bankruptcy Procedure (“Motion for Leave to … Continue Reading

Chase Lets Loose a Barrage of New Indemnification Demand Letters

Ten years after the financial crisis, mortgage companies and regional/local banks are still getting hit with new breach of contract and indemnification claims related to loans sold before the crisis. The latest case in point involves demand letters that JPMorgan Chase is sending out to lenders throughout the country. The letters pertain to loans sold by originators … Continue Reading

A Decade on, Crisis-Era Litigation Still Bedevils Banks

Banks and other financial institutions might reasonably have expected that, 10 years after the collapse of Bear Stearns and the demise of Lehman Brothers, they would finally be free and clear of lawsuits spawned by the financial crisis. That has not come to pass. Nor does freedom from legal actions rooted in the events of … Continue Reading

Lehman RMBS Settlement Likely to Spur Additional Claims

On March 8, the Bankruptcy Court for the Southern District of New York concluded a lengthy “claims estimation” trial to determine the appropriate final settlement price for a resolution of lawsuits filed on behalf of investors in residential mortgage-backed securities (RMBS) created by Lehman Brothers Holdings prior to its bankruptcy in September 2008. The judge … Continue Reading

The Eighth Circuit Raises the Bar for Would-Be Indemnitees

Here is a situation that comes up quite a bit in the world of business contracts containing indemnification provisions, and in the insurance industry as well. First, a party (“Party A”) gets sued, or threatened with a suit, and settles the claims against it.  Party A then seeks indemnification from another party (“Party B”) for … Continue Reading

CFPB Arbitration Rule Eliminated by Congress and President

On November 1, President Trump formally did away with a Consumer Financial Protection Bureau (CFPB) arbitration rule that would have given consumers the opportunity to file class actions against banks and other companies in the financial services industry. The CFPB rule was released in July 2017. It sought to prohibit and eliminate bans against class … Continue Reading

New Wave of Lehman Litigation Appears to Be Imminent

Thousands of mortgage lenders across the country either recently received, or will soon be receiving, this document from Lehman Brothers Holdings, Inc. (LBHI). It is a notice of a motion to approve a proposed settlement of Residential Mortgage-Backed Securities (RMBS) claims asserted by trustees and investors against LBHI over the last few years. The notice … Continue Reading

The New Administration’s Plans for the CFPB Take Shape

For those who have been wondering—as I did in a previous post—what the new presidential administration would mean for the Consumer Financial Protection Bureau (CFPB), an agency that has been in Republicans’ crosshairs virtually since it came into existence, we now have at least the beginnings of a concrete answer. Claiming that the CFPB’s leadership … Continue Reading

Minnesota State Court Defendants Win Partial Summary Judgment Over RFC and ResCap

Wednesday, February 1 brought a welcome development for the many correspondent lenders currently defending against claims filed by (or threatened with future lawsuits by) Residential Funding Company (“RFC”) and its successor-in-interest, the ResCap Liquidating Trust (“ResCap”). There have been three venues in which RFC and ResCap have been litigating, for years now, against correspondent lenders. … Continue Reading

Key Legal & Regulatory Issues for Financial Services Companies in 2017

With 2016 rapidly drawing to a close, here are some thoughts regarding the types of litigation and legal/regulatory issues that will likely be top-of-mind for financial services companies, especially mortgage companies and banks, in 2017: RMBS Suits and Mortgage Repurchase or Indemnification Claims I admit it—I never would have thought, when I started working on … Continue Reading

CFPB Steps Up Oversight of Companies’ Compensation Programs Following Wells Fargo Scandal

The Consumer Financial Protection Bureau (CFPB) will likely be weakened by the incoming Trump administration and its Republican allies in Congress. Exactly how, and how much, remains to be seen, however—and, in the meantime, the agency continues to make its presence felt. Earlier this week, the CFPB warned companies that it oversees to take steps … Continue Reading

Second Circuit Sides With AmEx, Reversing Lower Court Victory for DOJ

The United States Court of Appeals for the Second Circuit, a highly influential appellate court sitting in New York, on September 26 issued a unanimous ruling with major implications for antitrust and unfair competition laws, the payment card industry, and merchants that accept payments by credit card. The Second Circuit reversed a district court win … Continue Reading
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