Capital One 2013 Annual Report Download - page 276

CAPITAL ONE FINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
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. DBSP purchased the HELOC loans from
GreenPoint in 2006. The entire securitization, almost all of which is insured by AGM, is comprised of 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 in July 2011.
In October 2012, Capital One, N.A., (“CONA”) as successor to 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’s motion to dismiss the
complaint is currently pending before the court.
In May, June, and July 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 loans
originated by GreenPoint with an aggregate original principal balance of $3.4 billion. In January 2013, the
plaintiffs filed an amended consolidated 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 certain loans. (the “FHFA Litigation”). Plaintiffs seek specific performance of
the repurchase obligations with respect to the loans for which they have provided notice of alleged breaches as
well as all other allegedly breaching loans, rescissory damages, indemnification, costs and interest. GreenPoint’s
motion to dismiss the complaint is currently pending before the court.
In July 2013, Lehman XS Trust, Series 2006-4N, by its trustee U.S. Bank, N.A. filed a lawsuit in the Southern
District of New York against GreenPoint alleging breaches of representations and warranties made in certain loan
sale agreements, pursuant to which GreenPoint sold mortgage loans with an original principal balance of $915
million to Lehman Brothers for securitization and sale to investors. The lawsuit (“the LXS Trust Litigation”)
seeks specific performance of GreenPoint’s obligation to repurchase certain allegedly breaching loans, or in the
alternative, the repurchase of all loans in the trust, the award of rescissory damages, costs, fees and interest. In
January 2014, the court granted GreenPoint’s motion to dismiss based on the statute of limitations, ruling that
New York’s six-year statute of limitations began running no later than the time of the mortgage securitization.
The plaintiff has appealed the dismissal of the complaint.
As noted above in the section entitled Potential Mortgage Representation & Warranty Liabilities, the Company’s
subsidiaries establish reserves with respect to representation and warranty litigation matters, where appropriate,
within the Company’s overall representation and warranty reserves. Please see above for more details.
FHLB Securities Litigation
In April 2011, the Federal Home Loan Bank of Boston (the “FHLB of Boston”) filed suit against dozens of
mortgage industry participants in Massachusetts Superior Court, alleging, among other things, violations of
Massachusetts state securities laws in the sale and marketing of certain residential mortgage-backed securities
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