Capital One 2014 Annual Report Download - page 280

Mortgage Repurchase Litigation
In February 2009, GreenPoint was named as a defendant in a lawsuit commenced in the New York County Supreme
Court, by U.S. Bank, N. A., Syncora Guarantee Inc. and CIFG Assurance North America, Inc. (the “U.S. Bank
Litigation”). Plaintiffs allege, among other things, that GreenPoint breached certain representations and warranties
in two contracts pursuant to which GreenPoint sold approximately 30,000 mortgage loans having an aggregate
original principal balance of approximately $1.8 billion to a purchaser that ultimately transferred most of these
mortgage loans to a securitization trust. Some of the securities issued by the trust were insured by two of the plaintiffs:
Syncora and CIFG. Plaintiffs seek unspecified damages and an order compelling GreenPoint to repurchase the entire
portfolio of 30,000 mortgage loans based on alleged breaches of representations and warranties relating to a limited
sampling of loans in the portfolio, or, alternatively, the repurchase of specific mortgage loans to which the alleged
breaches of representations and warranties relate. In March 2010, the court granted GreenPoint’s motion to dismiss
with respect to plaintiffs Syncora and CIFG and denied the motion with respect to U.S. Bank. GreenPoint
subsequently answered the complaint with respect to U.S. Bank, denying the allegations, and filed a counterclaim
against U.S. Bank alleging breach of covenant of good faith and fair dealing. In February 2012, the court denied
plaintiffs’ motion for leave to file an amended complaint and dismissed Syncora and CIFG from the case. Syncora
and CIFG appealed their dismissal to the New York Supreme Court, Appellate Division, First Department (the “First
Department”), which affirmed the dismissal in April 2013. The New York Court of Appeals denied Syncora’s and
CIFG’s motion for leave to appeal the First Department’s decision in February 2014. Therefore, the case is now
proceeding with U.S. Bank as the sole plaintiff.
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. 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 asserted that any liability it faced lied with
GreenPoint, alleging that DBSP’s representations and warranties to AGM were 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. The parties resolved the case in November 2014.
In May, June, and July 2012, FHFA (acting as conservator for Freddie Mac) filed three summonses 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 moved to dismiss
the case as untimely under New York’s statute of limitations, and the court denied the motion without prejudice to
renew it after the completion of relevant discovery.
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,
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CAPITAL ONE FINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Capital One Financial Corporation (COF)