Justice Dianne T. Renwick


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Defendant sponsored a securitized transaction involving residential mortgage backed securities (RMBS). Plaintiff was the securitized trust’s administrator. Plaintiff alleged that the trust’s pooling and servicing agreement (PSA) required defendant to repurchase the mortgage loans because it breached warranties and representations in the unaffiliated seller agreement (SA) under which the loans to a passthrough deposit entity. First Department affirmed supreme court’s July 2, 2015 order declining to dismiss suit. It rejected the assertion that only the RMBS’s trustee could enforce repurchase or “putback” rights. It also found plaintiff’s April 30, 2013 action timely. Despite agreeing with defendant that the PSA’s repurchase protocol was a procedural condition precedent to suit, First Department rejected defendant’s claimed entitlement to a 90-day cure and demand period irrespective of whether it discovered any breach of the SA’s representations and warranties. Under the repurchase protocol a discovery of a breach of the pertinent representations and warranties and the failure to cure them triggered defendant’s repurchase and backstop repurchase obligations.