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Wash Fed v Countrywide

Wash Fed v Countrywide

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Published by DinSFLA

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Published by: DinSFLA on Oct 18, 2012
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11/25/2012

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COMPLAINT– 1
 
12345678910111213141516171819202122232425
Nold ♦ Muchinsky PLLC
Bellevue Place, Suite 930
 
10500 NE 8
th
StreetBellevue, WA 98004425.289.5555 FAX
 
425.289.6666
 David A. Nold, WSBA #19009Thomas W. Stone, WSBA #37559 NOLD MUCHINSKY PLLC10500 NE 8
th
St., Ste. 930Bellevue, Washington 98004Phone: (425) 289-5555Attorneys for Plaintiff Washington FederalUNITED STATES DISTRICT COURTWESTERN DISTRICT OF WASHINGTON AT SEATTLEWASHINGTON FEDERAL, a federallychartered savings association,Plaintiff,vs.COUNTRYWIDE HOME LOANS, INC.(d/b/a BANK OF AMERICA HOMELOANS), BANK OF AMERICACORPORATION, BANK OF AMERICA, N.A.,Defendants. NO.COMPLAINT FOR BREACH OF CONTRACT ANDJURY DEMANDWashington Federal (“Washington Federal”) brings this action against CountrywideHome Loans, Inc. (“Countrywide”), d/b/a Bank of America Home Loans, and against Bank of America, N.A. (“Bank of America”), and Bank of America Corporation (“BAC”) and alleges asfollows:
I.
 
NATURE OF ACTION
1.1
 
This is an action for declaratory relief and breach of contract stemming fromnumerous breaches of the Mortgage Loan Purchase and Servicing Agreement (“MLPSA”) andrelated transactional documents associated with Washington Federal’s purchase fromCountrywide of 10 pools of mortgage loans (collectively the “Transaction Documents”). This is
Case 2:12-cv-01820 Document 1 Filed 10/16/12 Page 1 of 118
 
 
COMPLAINT– 2
 
12345678910111213141516171819202122232425
Nold ♦ Muchinsky PLLC
Bellevue Place, Suite 930
 
10500 NE 8
th
StreetBellevue, WA 98004425.289.5555 FAX
 
425.289.6666
 also an action for breach of the Defendants’ servicing obligations contained in the MLPSA. Acopy of the MLPSA is attached hereto as Exhibit A. A copy of the Transaction Documentsassociated with the first pool of loans purchased is attached hereto as Exhibit B. The TransactionDocuments related to subsequent loan pool transactions are substantially similar to those inExhibit B.1.2 Over a period of approximately three years, Washington Federal purchased 1,046loans (individually, a “Loan” and collectively, the “Loans”) with an initial aggregate balance of approximately $400 million from Countrywide. The MLPSA and Transaction Documentsinclude specific representations and warranties by Countrywide regarding the Loans, including,
inter alia
, that the Loans complied with specific underwriting guidelines, that its origination practices were legal, prudent and customary in the industry, that the notes and mortgages or deeds of trust (collectively “Mortgages”) were not subject to any defenses or set offs and wereenforceable in accordance with their terms, that Countrywide was the sole owner and holder of the Loans, and that the Loans conformed to the parameters specified in the MLPSA andTransaction Documents. Countrywide’s representations and warranties are described in moredetail below.1.3 The MLPSA provides that Countrywide’s representations and warranties survivethe sale of the Loans to Washington Federal, and inure to the benefit of Washington Federalnotwithstanding any restrictive or qualified endorsement on any mortgage note or assignment or Washington Federal’s examination or failure to examine any collateral documents or credit files.1.4 In addition, the MLPSA obligates Countrywide to notify Washington Federal if itdiscovers any breach of a representation or warranty and to cure such breach within 90 days of notice. If Countrywide cannot cure the breach, it must repurchase the Loan(s) to which the breach relates at a price provided in the MLPSA.1.5 The MLPSA further provides that Countrywide is to “service and administer 
Case 2:12-cv-01820 Document 1 Filed 10/16/12 Page 2 of 118
 
 
COMPLAINT– 3
 
12345678910111213141516171819202122232425
Nold ♦ Muchinsky PLLC
Bellevue Place, Suite 930
 
10500 NE 8
th
StreetBellevue, WA 98004425.289.5555 FAX
 
425.289.6666
 Mortgage Loans sold . . . in accordance with the terms of [the MLPSA].” In exchange for thatservicing, Countrywide receives a servicing fee equal to 0.25% of the unpaid principal balance of the Loans. In the MLPSA, Countrywide agreed to “employ procedures in accordance with thecustomary and usual standards of practice of prudent mortgage servicers.” The MLPSAobligated Countrywide to,
inter alia
:1.5.1 “[M]ake reasonable efforts, in accordance with customary and usualstandards of practice of prudent mortgage servicers, to collect all payments due under eachMortgage Loan . . .” (Section 4.02);1.5.2 “[U]se reasonable efforts to foreclose upon or otherwise comparablyconvert the ownership of properties securing such of the Mortgage Loans as come into andcontinue in default and as to which no satisfactory arrangements can be made for collection of delinquent payments;” (Section 4.03(a)).1.5.3 “[U]se reasonable efforts to realize upon defaulted Mortgage Loans, insuch manner as will maximize the receipt of principal and interest by [Washington Federal],taking into account, among other things, the timing of foreclosure proceedings.” (Section4.03(a));1.5.4 “[M]anage, conserve, protect and operate each REO Property in the samemanner that it manages, conserves, protects and operates other foreclosed property for its ownaccount;” (Section 4.13(b)); and to1.5.5 “[U]se reasonable efforts to dispose of each REO Property as soon as possible and . . . sell each REO Property no later than one (1) year after title to such REOProperty has been obtained, unless Countrywide determines, and gives an appropriate notice to[Washington Federal], that a longer period is necessary for the orderly disposition of any REOProperty.” (Section 4.13(c)).1.6 In 2008 the Bank of America Defendants acquired Countrywide and assumed
Case 2:12-cv-01820 Document 1 Filed 10/16/12 Page 3 of 118

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