Clients of Houston-based Gibbs & Bruns LLP have issued binding instructions to the Bank of New York, as trustee, to open an investigation of ineligible mortgages in pools securing over $26 billion of residential mortgage-backed securities (RMBS) issued by Countrywide.
Under the terms of the applicable pooling and servicing agreements (PSAs), the holders of over 25% of the voting rights of the RMBS have the power to issue binding instructions to the trustee to investigate ineligible mortgages and to demand repurchase of mortgages that did not conform to the required representations and warranties at the time they were used as collateral for RMBS.
The holders issued their instruction letter after they met with senior representatives of the trustee, and its counsel, on Aug. 2, Gibbs & Bruns says.
‘We believe our clients' instruction, and the terms of the applicable PSAs, require the trustee to take action on each of these transactions,’ says Gibbs & Bruns LLP partner Kathy Patrick. ‘Our clients will pursue all contractual remedies available to them in these and the many other Countrywide RMBS deals where they have instructed us to take action to protect their rights and recover their losses.’
The instructions to the trustee included a list of securities to be investigated and the steps the trustee should pursue in the course of its investigation.
SOURCE: Gibbs & Bruns LLP