Residential Mortgage Expert Opines On Loan Servicing Dispute


Residential Mortgage Expert

This case involves investors that purchased mortgage-backed securities (MBS) who demanded repurchase of the MBS. The loans that were represented as solid or safe turned out to be fraudulently reported subprime loans. It is alleged that the mortgage servicing company should have known that these loans were subprime through their due diligence and if they did know, they had a duty to report this to the investors. An expert in residential mortgage servicing was sought to help counsel understand the business practices in the residential mortgage servicing space.

Question(s) For Expert Witness

  • 1. Are you knowledgeable about the standard customs and practices for residential mortgage servicing?
  • 2. Can you speak to how the servicing industry interprets provisions?
  • 3. Are you knowledgeable about the language of pooling and servicing agreements, including how parties would have likely interpreted the language of a contract when negotiating these transactions?
  • 4. Do you have specific experience drafting and/or negotiating pooling and servicing agreements?

Expert Witness Response E-055472

During the 11 years that I’ve served as an expert witness, I’ve testified over 30 times in either court, depositions, or arbitrations. For the past 6 or 7 years, 60% of my testimonies have been in the loan servicing area. I find that the three main areas of dispute in loan servicing that require expert testimony are:

1) Issues related to the Homeowners Bill of Rights (HBOR) with respect to alleged dual tracking, lack of a single point of contact (SPOC), and failure to properly reconsider a loan modification request upon a change in circumstance (California only)

2) General issues related to loan modification, but not HBOR related, such as failure to provide a modification, failure to properly consider a modification request under HAMP (Home Affordable Modification Program) or alleged excessive delay in processing or communicating with borrowers regarding attempted loan modifications

3) Wrongful foreclosure due to (1) and or (2) above, or due to misapplication of payments, etc. What could actually be labeled as a fourth area, although related to all three, would be communication issues between the borrower and servicer, what was told or not told to the borrower, what the borrower relied upon, etc.

Expert Witness Response E-055576

Expert-ID: E-055576

My entire career has been focused on residential whole loan mortgages and agency/non-agency mortgage-backed securities. Within this range of fixed income products, I have very broad experience in research, trading/hedging, structured finance (domestic and foreign), and product development. I have traded loans and securities. Many of those assets involved mortgage services and I am familiar with related practices. I am knowledgeable of the causes of the financial crisis and the resulting outcomes/regulations. I became involved in litigation and served as an expert witness on two such occasions. I would be very interested in learning more about the details of the case – if the servicer simply bought the servicing rights from the servicer, they have no fiduciary duty to the investors, nor would they be aware of the quality of those loans. If the mortgage servicer is the same as the originator, which I assume would be the case here, the situation would be different.

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