Subprime lending and mortgage finance

Overview
News

Bates White has the financial, economic, and statistical expertise to analyze the full range of financial and economic issues surrounding mortgage markets and structured finance. Our experience includes some of the important recent cases at the center of the subprime and mortgage finance litigation landscape. In these cases, our expertise in mortgage origination, mortgage pool analysis, structured finance, financial economics, and statistics have allowed our experts to analyze many mortgage-related issues including:

  • Loss causation and damages in contractual breaches and fraudulent misrepresentation
  • RMBS- and CDO-related origination and pricing
  • Mortgage pool sampling
  • Cash flow and risk modeling

Whether the issues arise in dispute resolution, public investigation, policymaking, or compliance, we accurately and efficiently measure economic and financial impacts and provide clients with clear, precise answers.

Selected experience

  • Testified as the damages expert on behalf of plaintiffs in Mastr Adjustable Rate Mortgages Trust 2006-OA2 v. UBS Real Estate Securities, a residential mortgage-backed securities (RMBS) matter. Calculated damages suffered by trusts or certificate holders as a result of UBS’s alleged failure to repurchase mortgages that breached the representations and warranties.
  • In the matter Federal Home Loan Mortgage Corp. v. Deloitte & Touche LLP, served as testifying expert on behalf of Freddie Mac in its dispute with Deloitte & Touche LLP (Deloitte) over improperly performed audits on Taylor Bean & Whitaker Mortgage Corporation (TBW). Freddie Mac alleged that, as a result of these audits and Deloitte’s failure to detect that TBW’s financial condition was fraudulently represented, Deloitte was responsible for the losses Freddie Mac sustained from loans purchased from TBW. Freddie Mac further claimed that many of these loans were in breach of the representations and warranties TBW made to Freddie Mac and, as a result of TBW’s collapse, it was unable to fulfill its repurchase obligations associated with those loans. Estimated damages to compensate Freddie Mac for all losses due to its purchase or guarantee of TBW loans, and for TBW’s failure to repurchase loans that breached the associated representations and warranties. The parties agreed to a settlement.
  • In Ambac v. EMC, served as testifying expert on behalf of Ambac Assurance Corporation (Ambac) in a dispute with JPMorgan Chase over residential mortgage-backed securities (RMBS). Ambac alleged that 11 RMBS sponsored by EMC Mortgage LLC (EMC), a subsidiary of JPMorgan Chase, were knowingly securitized with defective mortgage loans. Estimated damages to Ambac caused by insuring EMC-sponsored RMBS. Reconstructed the payment waterfalls and forecasted future loan performance to create a “but-for” model in which EMC bought back all significantly defective loans. JPMorgan Chase agreed to a $995 million settlement.
  • In the matter United States v. Wells Fargo Bank, served as testifying expert on behalf of the Department of Justice in connection with allegations that Wells Fargo defrauded the Federal Housing Administration (FHA) on loans that Wells Fargo underwrote and submitted for FHA endorsement. Determined damages arising from insurance claims on loans that allegedly failed to meet FHA-mandated underwriting guidelines. Wells Fargo agreed to a $1.2 billion settlement.
  • Retained as a testifying expert by multiple financial institutions in disputes over the quality of mortgages pooled into various mortgage-backed securities. Providing statistical analysis to estimate the fraction of mortgage loans in the securitized pools that failed to meet the originator’s stated guidelines. Analyzing the underlying risk of the pools and securities, examining loss causation issues, and estimating current damages and future losses.