Greenwich Fin. Servs. Distressed Mortgage Fund 3 LLC v. Countrywide Fin. Corp. (603 F.3d 23, 2010 U.S. App. LEXIS 8088 [2d Cir. Apr. 20, 2010]) [enhanced version available to lexis.com subscribers / unenhanced version available from lexisONE Free Case Law] involved an important statutory exception to federal jurisdiction under the Class Action Fairness Act of 2005 (CAFA), Georgene Vairo, a Professor of Law and William M. Rains Fellow at Loyola Law School, Los Angeles, says in this Emerging Issue Analysis. She writes:
"The Second Circuit carefully defined the scope of the exceptions to CAFA jurisdiction and CAFA appellate jurisdiction set out in 28 U.S.C. §§ 1332(d)(9)(C) and 1453(d)(3) for suits that relate to the rights, duties, and obligations relating to or created by or pursuant to any security. . . ."The defendants were affiliated corporations in the mortgage business: a holding company, a subsidiary that originated loans to individual consumers, and another subsidiary that serviced the loans. To raise money to lend to consumers, the lending subsidiary entered into a number of securitization transactions, in which it sold mortgages to specially created trusts, which received payment of interest and principal from mortgage borrowers. The trusts in turn sold certificates to investors. These securities entitled their owners to repayments of their principal, as well as interest payments. The trusts entered into agreements with the servicing subsidiary to administer the mortgages on their behalf. The terms of these securitization transactions, as well as the rights and duties of the parties to them, were laid out in contracts known as 'pooling and servicing agreements.' The certificate holders were not parties to these agreements."Seven states filed lawsuits accusing the defendants of predatory lending. The defendants settled these suits, but were required by the settlement to modify the terms of many of the mortgages owned by the trusts, thereby decreasing the value of the certificates."The plaintiffs in the Greenwich case were the holders of the certificates issued by the trusts. They filed a class action in state court, seeking a declaratory judgment requiring the defendants to repurchase the modified loans from the trusts at a price equal to their unpaid principal plus any accrued interest. They cited language from the pooling and servicing agreements in support of this remedy."Access the full version of the commentary with your lexis.com ID. Additional fees may be incurred. (Approx. 6 pages.)
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"Seven states filed lawsuits accusing the defendants of predatory lending." Much of lawsuits...