Capital One 2012 Annual Report Download - page 281

CAPITAL ONE FINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
GreenPoint has established reserves with respect to its probable and reasonably estimable legal liability from the
U.S. Bank Lawsuit, which reserves are included within the overall representation and warranty reserve. Also as
noted above, GreenPoint has exposure to loss in excess of the amount established within the overall
representation and warranty reserve because our reserve assumes, among other things, that we will be responsible
for only a portion of the portfolio-wide losses inherent in the securitizations and sought in the lawsuit.
In September, 2010, DB Structured Products, Inc. (“DBSP”) named GreenPoint in a third-party complaint, filed
in the New York County Supreme Court, alleging breach of contract and seeking indemnification (the “DBSP
Litigation”). In the underlying suit, Assured Guaranty Municipal Corp. (“AGM”) sued DBSP for alleged
breaches of representations and warranties made by DBSP with respect to certain residential mortgage loans that
collateralize a securitization insured by AGM and sponsored by DBSP (the “Underlying Lawsuit”). DBSP
purchased the HELOC loans from GreenPoint in 2006. The entire securitization, almost all of which is insured by
AGM, is comprised of about 6,200 mortgage loans with an aggregate original principal balance of approximately
$353 million. DBSP asserts that any liability it faces lies with GreenPoint, alleging that DBSP’s representations
and warranties to AGM are substantially similar to the representations and warranties made by GreenPoint to
DBSP. GreenPoint filed a motion to dismiss the complaint in October 2010, which the court denied on July 25,
2011. The parties are currently engaged in discovery. As noted above, GreenPoint has established reserves with
respect to its estimated probable and reasonable estimable legal liability from the DBSP Litigation, which
reserves are included within the overall representation and warranty reserve. Also as noted above, GreenPoint has
exposure to loss in excess of the amount established within the overall representation and warranty reserve
because our reserve assumes, among other things, that we will be responsible for only a portion of the losses
sought in the lawsuit.
On October 24, 2012, Capital One, N.A., (“CONA”) as successor to Chevy Chase Bank, F.S.B. (“CCB”), was
named as a defendant in a lawsuit filed in the Southern District of New York by Ambac Assurance Corporation
and the Segregated Account of Ambac Assurance Corporation (the “Ambac Litigation”). Plaintiffs allege, among
other things, that CONA (as successor to CCB) breached certain representations and warranties in contracts
relating to six securitizations with an aggregate original principal balance of approximately $5.2 billion which
were sponsored by a CCB affiliate in 2006 and 2007 and backed by loans originated by CCB. Almost half of the
securities issued by the six trusts are insured by Ambac. Plaintiffs seek unspecified damages, an order compelling
CONA to indemnify Ambac for all accrued and future damages based on alleged breaches of representations and
warranties relating to a limited sampling of loans in the portfolio, the repurchase of specific mortgage loans to
which the alleged breaches of representations and warranties relate, and all related fees, costs, and interest.
CONA moved to dismiss the complaint on January 14, 2013. As noted above, CONA has established reserves
with respect to its probable and reasonably estimable legal liability from the Ambac Litigation, which reserves
are included within the overall representation and warranty reserve. Also as noted above, CONA has exposure to
loss in excess of the amount established within the overall representation and warranty reserve because our
reserve assumes, among other things, that we will be responsible for only a portion of the alleged losses sought in
the lawsuit.
On May 30, June 29, and July 30, 2012, FHFA (acting as conservator for Freddie Mac) filed three summons with
notice in the New York state court against GreenPoint, on behalf of the trustees for three RMBS trusts backed by
9,594 loans originated by GreenPoint (the “FHFA Litigation”) with an aggregate original principal balance of
$3.4 billion. On January 25, 2013, the plaintiffs filed an amended complaint in the name of the three trusts, acting
by the respective trustees, alleging breaches of contractual representations and warranties regarding compliance
with GreenPoint underwriting guidelines relating to 1,808 loans. Plaintiffs seek specific performance of the
repurchase obligations with respect to the 1,808 loans for which they have provided notice of alleged breaches as
well as all other allegedly breaching loans, rescissory damages, indemnification, costs and interest.
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