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H&R Block, Inc. | 2015 Form 10-K 73
denied the motion. A portion of our loss contingency accrual is related to this matter for the amount of loss that we
consider probable and reasonably estimable.
On May 31, 2012, a lawsuit was filed by Homeward Residential, Inc. (Homeward) in the Supreme Court of the State
of New York, County of New York, against SCC styled Homeward Residential, Inc. v. Sand Canyon Corporation (Index
No. 651885/2012). SCC removed the case to the United States District Court for the Southern District of New York on
June 28, 2012 (Case No. 12-cv-5067). The plaintiff, in its capacity as the master servicer for Option One Mortgage Loan
Trust 2006-2 and for the benefit of the trustee and the certificate holders of such trust, asserts claims for breach of
contract, anticipatory breach, indemnity and declaratory judgment in connection with alleged losses incurred as a
result of the breach of representations and warranties relating to SCC and to loans sold to the trust. The plaintiff seeks
specific performance of alleged repurchase obligations or damages to compensate the trust and its certificate holders
for alleged actual and anticipated losses, as well as a repurchase of all loans due to alleged misrepresentations by SCC
as to itself and as to the loans' compliance with its underwriting standards and the value of underlying real estate. In
response to a motion filed by SCC, the court dismissed the plaintiff's claims for breach of the duty to cure or repurchase,
anticipatory breach, indemnity, and declaratory judgment. The case is proceeding on the remaining claims. We have
not concluded that a loss related to this matter is probable, nor have we accrued a liability related to this matter.
On September 28, 2012, a second lawsuit was filed by Homeward in the United States District Court for the Southern
District of New York against SCC styled Homeward Residential, Inc. v. Sand Canyon Corporation (Case No. 12-cv-7319).
The plaintiff, in its capacity as the master servicer for Option One Mortgage Loan Trust 2006-3 and for the benefit of
the trustee and the certificate holders of such trust, asserts claims for breach of contract and indemnity in connection
with losses allegedly incurred as a result of the breach of representations and warranties relating to 96 loans sold to
the trust. The plaintiff seeks specific performance of alleged repurchase obligations or damages to compensate the
trust and its certificate holders for alleged actual and anticipated losses. In response to a motion filed by SCC, the
court dismissed the plaintiff's claims for breach of the duty to cure or repurchase and for indemnification of its costs
associated with the litigation. The case is proceeding on the remaining claims. We have not concluded that a loss
related to this matter is probable, nor have we accrued a liability related to this matter.
On April 5, 2013, a third lawsuit was filed by Homeward in the United States District Court for the Southern District
of New York against SCC. The suit, styled Homeward Residential, Inc. v. Sand Canyon Corporation (Case No. 13-cv-2107),
was filed as a related matter to the September 2012 Homeward suit mentioned above. In this April 2013 lawsuit, the
plaintiff, in its capacity as the master servicer for Option One Mortgage Loan Trust 2007-4 and for the benefit of the
trustee and the certificate holders of such trust, asserts claims for breach of contract and indemnity in connection
with losses allegedly incurred as a result of the breach of representations and warranties relating to 159 loans sold
to the trust. The plaintiff seeks specific performance of alleged repurchase obligations or damages to compensate the
trust and its certificate holders for alleged actual and anticipated losses. In response to a motion filed by SCC, the
court dismissed the plaintiff's claims for breach of the duty to cure or repurchase and for indemnification of its costs
associated with the litigation. The case is proceeding on the remaining claims. We have not concluded that a loss
related to this matter is probable, nor have we accrued a liability related to this matter.
Underwriters and depositors are, or have been, involved in multiple lawsuits related to securitization transactions
in which SCC participated. These lawsuits allege or alleged a variety of claims, including violations of federal and state
securities laws and common law fraud, based on alleged materially inaccurate or misleading disclosures. Based on
information currently available to SCC, it believes that the 20 lawsuits in which notice of a claim has been made involve
39 securitization transactions with original investments of approximately $14 billion (of which the outstanding principal
amount is approximately $4 billion). Because SCC has not been a party to these lawsuits (with the exception of the
Federal Home Loan Bank of Chicago v. Bank of America Funding Corporation case discussed in this note) and has not
had control of this litigation or any settlements thereof, SCC does not have precise information about the amount of
damages or other remedies being asserted, the defenses to the claims in such lawsuits or the terms of any settlements
of such lawsuits. SCC therefore cannot reasonably estimate the amount of potential losses or associated fees and
expenses that may be incurred in connection with such lawsuits, which may be material. Additional lawsuits against
the underwriters or depositors may be filed in the future, and SCC may receive additional notices of claims for
indemnification from underwriters or depositors with respect to existing or new lawsuits or settlements of such
lawsuits. Certain of the notices received included, and future notices may include, a reservation of rights, which are
referred to as "reserved contribution rights," that encompasses a right of contribution which may become operative
if indemnification is unavailable or insufficient to cover all of the losses and expenses involved. We have not concluded