Welcome to Scribd. Sign in or start your free trial to enjoy unlimited e-books, audiobooks & documents.Find out more
Standard view
Full view
of .
Look up keyword or section
Like this

Table Of Contents

0 of .
Results for:
No results containing your search query
P. 1


|Views: 351|Likes:
Published by DinSFLA

More info:

Published by: DinSFLA on Feb 06, 2013
Copyright:Attribution Non-commercial


Read on Scribd mobile: iPhone, iPad and Android.
download as PDF, TXT or read online from Scribd
See more
See less





1UNITED STATES DISTRICT COURTSOUTHERN DISTRICT OF NEW YORK-------------------------------------xASSURED GUARANTY MUNICIPAL CORP. :f/k/a FINANCIAL SECURITY ASSURANCE :INC., : 11 Civ. 2375 (JSR):Plaintiff, : FINDINGS OF FACT,: CONCLUSIONS OF LAW,-v- : AND ORDER:FLAGSTAR BANK, FSB; FLAGSTAR CAPITAL :MARKETS CORP.; and FLAGSTAR ABS, LLC,::Defendants. :-------------------------------------xJED S. RAKOFF, U.S.D.J.Plaintiff Assured Guaranty Municipal Corporation(“Assured”)
alleges that defendants Flagstar Bank, FSB; FlagstarCapital Markets Corporation; and Flagstar ABS, LLC(collectively, “Flagstar”) breached a series of contracts thatprovided financial guaranty insurance against certain defaultsaffecting two Flagstar securitizations backed by home equityloans. In particular, Assured alleges that the loans underlyingthe securities were either materially fraudulent or were theproduct of material underwriting defects, in breach ofFlagstar’s express representations and warranties. BecauseFlagstar refused to cure the defects or substitute eligible
At the time of the transactions at issue, plaintiff was knownas Financial Security Assurance, Inc., or “FSA,” which Assuredpurchased in 2009. Trial Tr. 46:12-14. This Memorandum willrefer to this entity as “Assured” throughout, except where it isparticularly relevant to refer to it as “FSA.”
2loans, Assured claims that it is entitled to be reimbursed forits payment of insurance claims that arose when many of theunderlying loans defaulted.
 Assured filed its complaint on April 7, 2011. Followingdiscovery and motion practice that eliminated certain claims andremedies and clarified others, see Order, ECF No. 22 (July 7,2011); Am. Mem., ECF No. 56 (Oct. 27, 2011); Order, ECF No. 84(Feb. 29, 2012); Mem., ECF No. 100 (Sept. 25, 2012), the Courtheld a bench trial over twelve days between October 10 andNovember 12, 2012. The Court received into evidence 130
exhibits, including Flagstar’s voluminous underwritingguidelines, as well as portions of the depositions of MatthewRoslin, Flagstar’s former general counsel; Jean Garrick,Flagstar’s head of quality control; George Stiehl, a former vicepresident in FSA’s Residential Mortgage Group; David Beard, aformer director of FSA’s Corporate Finance Group; and DavidWilliams, a former managing director in FSA’s ResidentialMortgage Group.
The Court also heard live testimony from ninewitnesses: Russell Brewer, Assured’s Chief Surveillance Officer;
Assured also made claims relating to loan servicing, butwithdrew those claims prior to trial.
At the conclusion of the trial, the Court reserved ruling oncertain objections made to various portions of the proffereddeposition testimony. Although marked-up copies of depositiontranscripts reflecting the Court’s rulings on those depositionswill in due course be filed, the findings of fact made hereinreflect those rulings.
3Stanley Jursek, Flagstar Bank’s Executive Vice President andTreasurer and the head of Flagstar Capital Markets Corp.; MarniScott, Flagstar’s Executive Vice President of Mortgage CreditOperations; Dr. Nelson Lipshutz, Assured’s expert in statisticalsampling; Rebecca Walzak, Assured’s expert in mortgageunderwriting and origination; Dr. Joseph Mason, Assured’sdamages expert; Jeffrey Nielsen, Flagstar’s expert on the designand implementation of underwriting and due diligence reviews;Ann Rutledge, Flagstar’s valuation expert; and John Griggs,Flagstar’s expert in mortgage underwriting and origination.After the trial concluded, the Court received post-trial briefsfrom the parties on the issue of costs and expenses.BASIC FACTSBased on the evidence presented at trial, the factsstipulated to in the Joint Proposed Pretrial Order (“JPPO”), andthe Court’s assessment of the credibility and demeanor of thewitnesses and the inferences reasonably to be drawn therefromand from the evidence as a whole, the Court first makes thefollowing findings of facts that set the stage for the centraldispute in this case, the war of experts.Flagstar Bank, a federally chartered savings bank locatedprimarily in Michigan, provides residential mortgage loanorigination services to its customers, including the originationof home equity lines of credit (HELOCs) and second-lien

You're Reading a Free Preview

/*********** DO NOT ALTER ANYTHING BELOW THIS LINE ! ************/ var s_code=s.t();if(s_code)document.write(s_code)//-->