Justice Karla Moskowitz

 

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Under a 2005 master agreement J.P. Morgan Mortgage Acquisition Corp. (JPMAC) bought 6,510 residential mortgage loans from WMC Mortg. Corp. (WMC). Under a June 1, 2006 pooling and servicing agreement (PSA) JPMAC sold the securitized loans to a trust administered by Bank of New York Mellon (BNY). On June 28, 2006 the Trust sold residential mortgage-backed securities to investors. In addition to representations and warranties in the PSA and mortgage loan sale and interim servicing agreement, about the nature and quality of the loans, WMC and JPMAC agreed to certain repurchase, indemnification and notice obligations. Manhattan supreme court dismissed BNY’s Nov. 1, 2013 “put back” suit arising from notices to WMC and JPMAC that over 1,593 mortgage loans breached warranties. WMC and JPMSC did not repurchase the defective loans. First Department reinstated BNY’s assertion that JPMAC breached its “backstop” repurchase duty under the PAS, but BNY could not assert such a claim against WMC when WMC failed to comply with a repurchase demand after June 28, 2012, because after that date WMC had not repurchase obligation and JPMAC had no backstop obligation.

Justice Karla Moskowitz

 

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Under a 2005 master agreement J.P. Morgan Mortgage Acquisition Corp. (JPMAC) bought 6,510 residential mortgage loans from WMC Mortg. Corp. (WMC). Under a June 1, 2006 pooling and servicing agreement (PSA) JPMAC sold the securitized loans to a trust administered by Bank of New York Mellon (BNY). On June 28, 2006 the Trust sold residential mortgage-backed securities to investors. In addition to representations and warranties in the PSA and mortgage loan sale and interim servicing agreement, about the nature and quality of the loans, WMC and JPMAC agreed to certain repurchase, indemnification and notice obligations. Manhattan supreme court dismissed BNY’s Nov. 1, 2013 “put back” suit arising from notices to WMC and JPMAC that over 1,593 mortgage loans breached warranties. WMC and JPMSC did not repurchase the defective loans. First Department reinstated BNY’s assertion that JPMAC breached its “backstop” repurchase duty under the PAS, but BNY could not assert such a claim against WMC when WMC failed to comply with a repurchase demand after June 28, 2012, because after that date WMC had not repurchase obligation and JPMAC had no backstop obligation.