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Foreword |
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Table of Contents |
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Chapter 1: |
Consumer Class Actions |
Lucia Nale ~ |
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- § 1:1 : Introduction1-2
- § 1:2 : Fair Lending and Discrimination Litigation1-3
- § 1:2.1 : Disparate Impact1-4
- [A] : Sampling of Disparate Impact Claims1-5
- § 1:2.2 : Reverse Redlining Claims1-7
- § 1:2.3 : Civil Rights Act Claims1-8
- § 1:2.4 : State Consumer Protection and Unfair and Deceptive Trade Practice Claims1-8
- § 1:2.5 : Enforcement Actions1-8
- § 1:2.6 : State Attorney General Investigations and Settlements1-10
- § 1:2.7 : State Regulatory Actions1-12
- § 1:3 : Truth in Lending Act Litigation1-12
- § 1:3.1 : Sampling of Recent Case Filings1-17
- § 1:4 : Real Estate Settlement Procedures Act Claims1-19
- § 1:4.1 : Sampling of YSP Cases1-19
- § 1:4.2 : Excessive Fee Claims1-21
- [A] : Sampling of Excessive Fee Claims1-21
- § 1:5 : Servicing, Bankruptcy and Foreclosure Related Class Actions1-23
- § 1:5.1 : Sample Predatory Servicing Class Action Cases1-24
- § 1:5.2 : Bankruptcy-Related Claims1-25
- [A] : Sample Bankruptcy Cases1-25
- § 1:5.3 : MERS and Foreclosure Related Litigation1-29
- [A] : Actions Brought by States and Municipalitiesin an Effort to Deal with Mounting Foreclosures1-30
- § 1:5.4 : “Suitability” Actions1-32
- § 1:6 : Conclusion1-33
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Chapter 2: |
Private Litigation—Issues in Securities Laws Class Actions |
Caryn Jacobs ~
Jeffrey M. Strauss ~
Katherine E. Agonis ~ |
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- § 2:1 : Introduction2-2
- § 2:2 : Stoneridge and Subprime2-2
- § 2:2.1 : Scheme Liability2-4
- § 2:2.2 : Stoneridge2-6
- § 2:2.3 : Exception for Financing Schemes—Such As Subprime Securitization?2-8
- § 2:2.4 : W[h]ither Subprime?2-11
- § 2:3 : Pleading Scienter After Tellabs in Section 10(b) Cases Generally and in the “Subprime” Context2-12
- § 2:3.1 : Pleading Scienter in Private Actions Under Rule 10b-52-14
- § 2:3.2 : PSLRA Raised Bar for Pleading Scienter by Requiring a “Strong Inference,” but Courts of Appeals Differed in Applying Standard2-15
- § 2:3.3 : Tellabs: The PSLRA Requires Consideration of Competing Inferences in Determining Whether Scienter Is Adequately Pleaded2-16
- [A] : The Seventh Circuit’s First Opinion2-16
- [B] : The Supreme Court’s “Prescription”2-17
- § 2:3.4 : The Seventh Circuit’s Decision on Remand from Tellabs2-19
- § 2:3.5 : Tellabs in the Seventh Circuit2-22
- § 2:3.6 : Tellabs in the Second Circuit2-25
- § 2:3.7 : Tellabs in the Ninth Circuit2-32
- § 2:3.8 : Tellabs: Two “Subprime” Illustrations2-38
- § 2:3.9 : What Conclusions Can We Draw?2-43
- § 2:4 : Removal of Class Actions Filed in State Court Alleging Federal Securities Law Violations2-45
- § 2:4.1 : Closer Look at SLUSA and CAFA2-47
- § 2:4.2 : Recent SLUSA and CAFA Removal Cases2-49
- § 2:4.3 : Arguments for Removal Under SLUSA and CAFA2-53
- [A] : SLUSA’s Removal Provision Is Not Limited to Cases Based on State Law2-53
- [B] : CAFA’s “Securities Exception” Does Not Apply to Claims of Violations of Federal Securities Law or Preclude Their Removal2-55
- [C] : 1933 Act’s Non-removal Position Is Superseded by CAFA2-58
- [D] : Legislative History for Both SLUSA and CAFA Suggests Return of Most Securities Class Actions to Federal Court2-58
- § 2:4.4 : Conclusion2-60
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Chapter 3: |
Commercial Claims Among Market Participants |
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- § 3:1 : Commercial Entity Litigation3-2
- § 3:2 : Unconsummated Transactions in the Wake of the Subprime Crisis3-2
- § 3:2.1 : Capitol Justice LLC v. Wachovia Corp.3-3
- § 3:2.2 : Clear Channel Communications, Inc. v. Citigroup Global Markets3-7
- § 3:2.3 : UBS Securities LLC v. The Finish Line, Inc.3-8
- § 3:2.4 : Penn National Gaming & Fortress Investment Group (Corporate Buyout Failure)3-10
- § 3:2.5 : Anheuser-Busch Companies v. InBev NV/SA3-11
- § 3:3 : Lender Foreclosure Due to Failure to Meet Margin Calls3-13
- § 3:3.1 : Luminent Mortgage Capital v. HSBC Securities3-13
- § 3:3.2 : VCG Special Opportunities Master Fund Limited v. Citibank, N.A.3-14
- § 3:3.3 : American Home Mortgage Investment Corp. v. Lehman Brothers Inc.3-15
- § 3:4 : Suits for Misrepresentation in Asset Quality3-18
- § 3:4.1 : Citigroup Global Markets Realty v. Accredited Home Lenders3-18
- § 3:4.2 : Luminent Mortgage Capital, Inc. v. Merrill Lynch3-19
- § 3:4.3 : Wachovia Bank, N.A. v. Ameriquest Mortgage Company3-20
- § 3:4.4 : Barclays Bank PLC v. Bear Stearns Asset Management Inc.3-21
- § 3:4.5 : HSH Nordbank AG v. UBS AG3-22
- § 3:5 : Suits to Rescind Contracts to Avoid Subprime Losses3-23
- § 3:5.1 : Merrill Lynch International v. XL Capital Assurance3-24
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Chapter 4: |
Government Enforcement Response |
Stephen J. Crimmins ~ |
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- § 4:1 : Overview4-1
- § 4:2 : Enforcement Focus and Priorities4-2
- § 4:3 : Investigative Process4-4
- § 4:4 : SEC and FINRA Subprime Cases4-5
- § 4:5 : Settled Cases Involving Auction Rate Securities4-8
- § 4:6 : Credit Reporting Agencies4-11
- § 4:7 : Market Integrity4-14
- § 4:7.1 : Actions Against Manipulative False Rumors4-14
- § 4:7.2 : Restrictions on Short Selling4-16
- § 4:8 : Enhanced Cooperation Among Regulators4-19
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Chapter 5: |
Internal Investigations |
Sheila Finnegan ~
Lori Lightfoot ~ |
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- § 5:1 : Introduction5-2
- § 5:2 : When to Conduct an Internal Investigation5-4
- § 5:3 : Who Should Oversee and Conduct the Investigation5-7
- § 5:3.1 : Oversight of the Investigation5-7
- § 5:3.2 : Conducting the Investigation5-8
- § 5:4 : Authorizing an Internal Investigation5-9
- § 5:5 : Scope of Investigation5-10
- § 5:6 : Document Preservation5-11
- § 5:6.1 : Why Document Preservation Is Important5-11
- § 5:6.2 : Working with Internal IT Personnel: Suspension of Automatic Document Destruction5-13
- § 5:6.3 : Document Preservation Notices/Litigation Holds5-13
- [A] : Issuance of Preservation Notice5-13
- [B] : Additional Due Diligence with Key Custodians5-14
- [C] : Follow-up Compliance Monitoring5-15
- § 5:7 : Information Gathering5-16
- § 5:8 : Employee Interviews5-17
- § 5:8.1 : Potential Leaks Stemming from Interviews5-17
- § 5:8.2 : Who Should Attend Interviews and Question Employees5-18
- § 5:8.3 : Are Communications During Employee Interview Privileged?5-18
- § 5:8.4 : Are Interview Notes/Summaries Protected As Attorney Work Product?5-20
- § 5:8.5 : Upjohn Warning: Counsel Represents the Company (Not the Employee)5-21
- § 5:8.6 : Warning that Information from Employee May Be Provided to Regulators5-22
- § 5:8.7 : Employee Asking of Need for Separate Counsel5-22
- § 5:8.8 : Use of Documents During Interviews5-23
- § 5:8.9 : Witness Tampering and Obstruction5-24
- § 5:8.10 : Interview Questions to Locate and Preserve Documents5-25
- § 5:8.11 : Requesting Employees to Maintain Confidentiality5-25
- § 5:8.12 : Interviews of Former Employees5-25
- § 5:9 : Experts and Investigators Assisting with the Internal Investigation5-26
- § 5:10 : How and to Whom the Progress and Results of the Internal Investigation Should Be Communicated5-26
- § 5:10.1 : Limit Dissemination of Information5-27
- § 5:10.2 : Form and Content of Interim and Final Reports5-27
- § 5:10.3 : Risk of Waiver5-29
- [A] : Disclosure to the Board5-29
- [B] : Disclosure to External Auditors5-30
- [C] : Disclosure to Public/Press5-32
- [D] : Disclosure to Regulators5-32
- § 5:11 : Conclusion5-35
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Chapter 6: |
Searches and Seizures of Computers, Storage Devices, Equipment and Software |
Anthony M. Alexis ~ |
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- § 6:1 : Introduction6-2
- § 6:2 : Why, When, and How Does the Government Use Search Warrants?6-2
- § 6:2.1 : Property Is “Evidence of a Crime”6-5
- § 6:2.2 : Property Is “Contraband, Fruits of a Crime or Other Items Illegally Possessed”6-5
- § 6:2.3 : Property Is “Designed or Intended to Be Used” As a Means of Committing a Criminal Offense6-5
- § 6:2.4 : Process for Obtaining a Warrant6-6
- § 6:3 : The Feds Came: Determine What the Government Took and Why6-6
- § 6:4 : How to Attack a Search and/or Seizure6-7
- § 6:4.1 : Obtaining and Challenging the Affidavit in Support of the Warrant6-8
- § 6:4.2 : Uniqueness of Computers and the File Cabinet Analogy6-8
- § 6:4.3 : Prohibition Against General Warrants6-12
- § 6:4.4 : Challenging or Limiting the Search ofa Computer6-14
- § 6:4.5 : Challenging Delays in the Search of a Computer6-17
- § 6:4.6 : Challenging the Inventory6-19
- § 6:5 : Conclusion6-20
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Chapter 7: |
Finance |
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- § 7:1 : Important Developments in Finance During the Recent Cycle of Economic Growth7-2
- § 7:1.1 : Emergence of Securitization as a Mainstream Method for Financing Financial Assets7-2
- [A] : Obtaining Alternative Investor Bases7-3
- [B] : Accounting Treatment7-3
- [C] : Obtaining a Lower Cost of Funds7-4
- [D] : Regulatory Capital Relief7-4
- [E] : Source of Funds During Periods of Financial Stress7-5
- [F] : Other Motivations7-5
- § 7:1.2 : Other Important Finance Developments During the Recent Economic Cycle7-6
- [A] : Growth of the Collateralized Debt Obligation and Structured Investment Vehicle Markets7-6
- [B] : Development of the Structured Credit Default Swap Market7-11
- [C] : Development of the Principal Finance Market for Consumer Loans7-12
- [D] : Growth in Number and Size of Hedge Funds Buying ABS and Leveraged Loans7-13
- [E] : Development of Auction Rate Securities7-13
- § 7:2 : Some Significant Causes of the Current Credit Crisis7-14
- § 7:2.1 : Intermediation of Risk7-14
- [A] : Volume Based Compensation Creates Conflicts of Interest at the Point of Loan Origination7-14
- [B] : Originators Appeared to Be Motivated to Produce Volume7-15
- [C] : Banks that Purchase Loans and Underwrite ABS Appeared to Be Motivated by Volume7-16
- [D] : Rating Agencies that Rated ABS Appeared to Be Motivated by Volume7-16
- § 7:2.2 : Excessive Leverage7-16
- § 7:3 : Responses to the Credit Crisis7-17
- § 7:3.1 : Federal Reserve Intervention7-17
- § 7:3.2 : Creation of Distressed Funds7-20
- § 7:3.3 : Recapitalization of Banks7-21
- § 7:3.4 : Changes to Asset-Backed Commercial Paper (ABCP) and Term ABS7-24
- § 7:3.5 : Changes in Servicing7-25
- § 7:3.6 : Rating Agency Reform7-26
- § 7:3.7 : Solutions to the Auction Rate Problem7-27
- § 7:3.8 : The CDO and CLO Markets7-28
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Chapter 8: |
Mergers & Acquisitions of Subprime Mortgage Businesses |
Elizabeth A. Raymond ~ |
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- § 8:1 : Introduction8-2
- § 8:2 : Letters of Intent and Term Sheets8-4
- § 8:3 : Legal Due Diligence8-7
- § 8:4 : Transaction Structures8-18
- § 8:4.1 : Stock Purchase8-18
- § 8:4.2 : Asset Purchase8-19
- § 8:4.3 : Section 363 Sale8-20
- § 8:4.4 : Merger8-21
- § 8:4.5 : Subprime Transaction Structures8-22
- § 8:5 : Purchase Price Alternatives8-22
- § 8:5.1 : General8-22
- § 8:5.2 : Valuation Techniques8-23
- § 8:5.3 : Purchase Price Based on Valuation of Whole Business versus Valuation of Portfolio8-24
- § 8:5.4 : Closing Date and Post-Closing Purchase Price Adjustments8-27
- § 8:6 : Documenting the Deal8-29
- § 8:6.1 : Description of Transaction Structure8-29
- § 8:6.2 : Representations and Warranties8-30
- § 8:6.3 : Covenants8-33
- § 8:6.4 : Conditions to Closing8-34
- § 8:6.5 : Indemnities8-35
- § 8:7 : Consent Issues8-36
- § 8:8 : Conclusion8-39
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Chapter 9: |
Real Estate |
Robert E. Gordon ~ |
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- § 9:1 : Introduction9-5
- § 9:2 : Purchases of Real Estate Secured Loans9-6
- § 9:2.1 : Identification of Status of Loan9-6
- [A] : When Is a Loan Considered to Be “Distressed Debt”?9-6
- [A][1] : Existing or Impending Events of Defaults9-6
- [A][2] : Insufficient Reserves or Operating Cash Flow Problems9-7
- [A][3] : Environmental Issues9-8
- [A][4] : Inability to Refinance Due to Valuation Issues, Capital Market Issues, Operating Issues9-9
- [B] : Existing Defaults9-10
- [B][1] : Monetary (Principal, Interest, Taxes and Insurance Premiums)9-10
- [B][2] : Financial Covenants9-10
- [B][3] : Insurance9-10
- [C] : Most Recent Appraisal9-11
- [D] : Most Recent Property Budgets, Financial Statements for Borrower, Guarantors, Other Significant Parties9-11
- § 9:2.2 : Identification of Loan Purchaser’s Purpose/Goals9-11
- [A] : Restructure Loan for Long-term Hold9-12
- [B] : Restructure Loan for Short-term Hold—Establish Ability of Borrower to Refinance9-12
- [C] : Control Debt in a Pending or Possible Bankruptcy9-12
- [D] : Expectation to Exercise Remedies and Possibly Acquire Title9-13
- § 9:2.3 : Review of Loan Documents9-13
- [A] : Loan Assignment/Participation Provisions and Standards9-13
- [B] : Tax Withholding Exemptions9-14
- [C] : Financial Reporting and Information Provisions9-14
- [D] : Financial Covenants9-14
- [E] : Equity Contribution Requirements9-14
- [F] : Borrower SPE Provisions, Non-recourse Carve-outs9-15
- [F][1] : Recourse for Loss or Damage9-15
- [F][2] : Events Making Loan Fully Recourse9-15
- [G] : Remedies Provisions9-15
- [H] : Lender Obligations (Escrow/Reserve Provisions, Etc.)9-16
- [I] : Subordination Agreements, Intercreditor Agreements for Other Debt9-16
- [J] : Leasing Standards9-16
- § 9:2.4 : Purchase of Loan or Interests Therein9-16
- [A] : Proposed Assignment or Participation9-16
- [B] : If Less than 100% Interest Is Purchased9-16
- [B][1] : Priority of Interest and Payments9-16
- [B][2] : Control over Decision-making9-17
- [B][3] : Risk of Bankruptcy or Insolvency of Holder of Retained Loan Interest9-17
- [C] : Rating Agencies and Specific Rating Agency Requirements9-17
- § 9:2.5 : Review of Loan Servicing File, Information, Reports9-17
- [A] : Payment History9-17
- [B] : Financial Statements9-17
- [C] : Rent Rolls, Leases9-18
- [D] : Escrow and Reserve Account Statements9-18
- [E] : Insurance Certificates and Policies9-18
- [F] : Default Notices9-18
- [G] : Amendments, Waivers, Forbearance Agreements9-18
- [H] : Prior Property Transfer and Loan Assignment/Assumption9-18
- [I] : Prior Transfers of Upper-Tier Borrower Ownership Interests9-18
- [J] : For New Construction/Rehab Projects: Draw/Funding Requests, Title Date Down Endorsements9-18
- [K] : Other Notices, Information9-19
- § 9:2.6 : Updated Title Search9-19
- [A] : Review New Title Exceptions9-19
- [B] : Status of Taxes9-19
- [C] : Mechanics’ Liens, Other Liens9-19
- § 9:2.7 : New UCC Searches9-19
- [A] : Confirmation that UCC Filings Are Still Current and Are Valid9-20
- [A][1] : Current Expiry9-20
- [A][2] : Next Required Continuation Statement9-20
- [B] : Identify Any Other Liens or Security Interests9-20
- § 9:2.8 : New Appraisal (MAI, FIRREA)9-20
- § 9:2.9 : Current Financial Statements for Borrower, Guarantors9-21
- § 9:2.10 : Letters of Credit9-21
- [A] : Review Terms of Outstanding Letters of Credit, Expiry Dates, Renewal Provisions and Draw Provisions9-21
- [B] : Review Financial Status of Issuer of Letters of Credit9-22
- § 9:3 : Real Estate Secured Loans—Loan Documents9-22
- § 9:3.1 : Loan Agreement9-22
- § 9:3.2 : Evidence of Indebtedness: Promissory Note9-22
- § 9:3.3 : Basic Lien Instrument: Mortgage, Deed of Trust, Deed to Secure Debt9-23
- § 9:3.4 : Other Security Documents9-23
- [A] : Assignment of Leases and Rents9-23
- [B] : Security Agreement9-24
- [C] : UCC Financing Statements9-24
- [D] : Environmental Indemnity Agreement9-24
- [E] : Guaranties9-25
- [F] : Collateral Assignments and Pledge Agreements9-25
- [F][1] : Property Management Agreement9-25
- [F][2] : Development Agreement, Construction Documents, Bonds, Warranties, Plans9-25
- [F][3] : Interest Rate Caps, Swaps, Collars9-25
- [F][4] : Equity Interests, Securing Mezzanine Loans9-26
- [G] : Letters of Credit9-26
- [H] : Escrow and Reserve Account Agreements9-27
- § 9:3.5 : Perfection9-28
- [A] : Recordation, Title Insurance9-28
- [A][1] : Title Insurance Policy; Reinsurance9-28
- [A][2] : Title Endorsements9-28
- [A][3] : Date Down Endorsements9-28
- [A][4] : REAs, Declarations, Other Title Exception Documents9-29
- [A][5] : Survey9-29
- [B] : Filing UCC Fixture Filings9-29
- [B][1] : Original UCC Searches9-30
- [B][2] : UCC Insurance9-30
- [B][3] : UCC Continuation Statements9-30
- [C] : Account Control Agreement; Reserve Accounts9-31
- [D] : Lockbox and Lockbox Agreement for Collection of Rents9-31
- § 9:3.6 : Collateral9-31
- [A] : Land (Fee or Ground Lease)9-31
- [B] : Buildings and Improvements9-32
- [C] : Equipment, Fixtures and Other Personal Property (Exclusions)9-32
- [D] : Leases, Contract Rights9-33
- [D][1] : Estoppel Letters9-33
- [D][2] : Tenant SNDAs9-33
- [E] : Interest Rate Caps, Swaps, Collars9-34
- [F] : Intangibles9-34
- § 9:3.7 : Other Significant Loan Documents9-34
- [A] : Due Diligence Reports9-34
- [A][1] : Environmental Report and Reliance Letter9-34
- [A][2] : Appraisals (MAI, FIRREA)9-35
- [A][2][a] : At Loan Closing9-35
- [A][2][b] : Updates During Loan Term9-35
- [A][2][c] : Right to Request Additional Updates9-35
- [A][3] : Engineering Report and Reliance Letter (ADA, Other Legal Compliance)9-35
- [A][4] : Zoning Report, PZR Report, Title Zoning Endorsement9-36
- [A][5] : Soils Report and Reliance Letter (New Construction)9-36
- [A][6] : Certificates of Occupancy, Licenses, Permits9-36
- [A][7] : Utilities and Utility Letters/Service Agreements9-36
- [A][8] : Site Plan, Subdivision9-37
- [A][9] : Form Lease9-37
- [A][10] : Tax Abatement Documents9-37
- [B] : Loan Closing Statement9-37
- [C] : Property Management Agreement9-37
- [D] : Ground Lease9-38
- [E] : Subordinate Financing—Subordination Agreement/Provisions and Intercreditor Agreement9-38
- [E][1] : Second Mortgage9-38
- [E][2] : Mezzanine Debt9-38
- [F] : New Construction/Rehab Projects9-39
- [G] : Legal Opinions—Review to Identify Original Transactional Issues9-39
- [G][1] : General Organizational, Authority and No Conflict Opinion9-39
- [G][2] : Enforceability Opinions (Including Local Counsel)9-39
- [G][3] : UCC Security Interest Opinions9-40
- [G][4] : Non-consolidation Opinions9-40
- [H] : Organizational and Authority Documents9-40
- § 9:4 : Workouts, Foreclosure, Remedies of Real Estate Secured Loans9-40
- § 9:4.1 : Pre-workout or Pre-negotiation Agreement9-40
- § 9:4.2 : Expected Timetable and Budget9-41
- § 9:4.3 : Updated Due Diligence Reports9-41
- [A] : Environmental9-41
- [B] : Appraisal9-41
- [C] : Title9-41
- § 9:4.4 : Workout of Loan9-41
- [A] : Loan Restructuring9-41
- [B] : Forbearances and Waivers9-42
- [C] : Additional Required Equity, Credit Support9-42
- [D] : Conveyance Documents in Escrow9-42
- § 9:4.5 : Foreclosure of Real Estate Secured Loans9-42
- [A] : Minutes of Foreclosure (Updated Title Search)9-43
- [B] : State Foreclosure Laws9-43
- [B][1] : Non-judicial Foreclosure, Power of Sale9-43
- [B][2] : California and Certain Other Jurisdictions:One Action Rule, Anti-deficiency Rule9-43
- [B][3] : Other Remedies9-44
- [C] : Bankruptcy of Borrower9-44
- [D] : SPE Mortgagor9-44
- [E] : Non-recourse Carve-outs and “Bad Boy” Guaranties9-45
- § 9:4.6 : Deed in Lieu of Foreclosure9-45
- [A] : Approach: Contractual9-46
- [B] : Updated Title Insurance9-46
- § 9:4.7 : Consent Foreclosure9-46
- § 9:4.8 : Other Remedies9-46
- [A] : Appointment of Receiver in State Court Action, Lockbox for Rents9-46
- [B] : UCC Remedies9-47
- [B][1] : UCC Foreclosure Sale9-47
- [B][2] : Collection and Enforcement of Rights to Payment9-48
- [B][3] : Escrow, Reserve and Collection Accounts9-48
- [B][4] : Strict Foreclosure9-48
- [B][5] : Deficiency Claim9-48
- [C] : Enforcement of Guaranties, Letters of Credit9-49
- [D] : Set-off9-49
- § 9:4.9 : Expenses9-49
- [A] : Lender’s Legal Fees and Expenses9-49
- [B] : Protective Advances9-49
- § 9:5 : Conclusion9-50
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Chapter 10: |
Private Equity/Funds |
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- § 10:1 : Background—Fund Structure and Operation10-2
- § 10:1.1 : Organization10-2
- § 10:1.2 : Private Equity Model10-3
- § 10:1.3 : Hedge Fund Model10-3
- § 10:1.4 : Hybrids10-4
- § 10:1.5 : Co-Investment Opportunities and Side Cars10-4
- § 10:1.6 : Side Pockets10-5
- § 10:2 : Regulatory Considerations10-6
- § 10:2.1 : Exemptions and Their Limitations10-6
- § 10:2.2 : Investment Company Act of 1940 Registration Exclusion10-7
- [A] : Sections 3(c)(1) and 3(c)(7)10-7
- [B] : Section 3(c)(5)(C) Mortgage and Real Estate Interests Exception10-8
- § 10:2.3 : Investment Advisers Act of 1940 Exemption10-10
- § 10:2.4 : Affiliate Transactions10-11
- § 10:2.5 : ERISA10-11
- [A] : 25% Exception10-12
- [B] : Operating Company Exception10-13
- § 10:3 : The Subprime Crisis and Valuation of Distressed Assets10-14
- § 10:3.1 : Internal Valuation10-15
- § 10:3.2 : Reporting10-15
- § 10:3.3 : Concentration Clauses and Leverage Covenants10-16
- § 10:3.4 : Fees and Profit Sharing10-17
- § 10:3.5 : Removal of the General Partner10-18
- § 10:4 : Liquidity Concerns and Fund Operations10-19
- § 10:4.1 : Investor and Portfolio Liquidity10-19
- § 10:4.2 : In-Kind Distributions10-19
- § 10:4.3 : Investor Default10-20
- § 10:4.4 : Exclusivity and Successor Funds10-21
- § 10:5 : Conclusion10-21
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Chapter 11: |
The Bankruptcy Implications of the Subprime Mortgage Crisis |
Travis D. Rojakovick ~
Sean T. Scott ~ |
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- § 11:1 : Introduction11-2
- § 11:2 : Protected Contracts11-5
- § 11:2.1 : Repurchase Agreements11-5
- [A] : Statutory Definition and Requirements for Treatment as a Repurchase Agreement11-7
- [A][1] : Agreement to Sell and Simultaneous Agreement to Repurchase11-8
- [A][2] : Eligible Financial Assets11-9
- [A][3] : Tenor Limitations11-10
- [B] : Protected Counterparties: Repo Participants and Financial Participants11-10
- § 11:2.2 : Securities Contracts11-12
- [A] : Introduction11-12
- [A][1] : Types of Underlying Securities11-12
- [A][2] : Transactions Included in the “Securities Contracts” Definition11-14
- [B] : Repurchase Transactions as “Securities Contracts”11-15
- [C] : Protected Counterparties: Repo Participants and Financial Participants11-17
- § 11:2.3 : Protections Afforded by the Bankruptcy Code11-19
- [A] : Right to Liquidate, Terminate, and Accelerate Protected Contracts11-20
- [B] : Certain Limitations on Protected Rights11-21
- [B][1] : Rights Must Exist by Contract11-21
- [B][2] : Protected Rights Are Limited to Self-Help Remedies11-22
- [B][3] : Remedies Must Be Exercised “Because of” the Bankruptcy of the Debtor11-22
- [B][4] : Limitation on the Damage Claims11-24
- [C] : Protections from Avoidance11-25
- [D] : Protected Right to Setoff11-29
- § 11:2.4 : Lessons from the Subprime Cases11-30
- [A] : Construing Particular Agreements11-30
- [B] : Open Issues: Obligation of Repo Buyer to Return Surplus11-33
- § 11:3 : Bankruptcy Code Section 363 Sales11-34
- § 11:3.1 : Background on Section 363 Sales11-34
- § 11:3.2 : Lessons from the Subprime Cases11-35
- [A] : Mortgage Servicing Rights: What Are Related Terms?11-35
- § 11:4 : Consumer Bankruptcies11-37
- § 11:4.1 : Changes in the Bankruptcy Code Following BAPCPA11-37
- [A] : Chapter 13 versus Chapter 711-37
- [B] : Means-Testing11-37
- [C] : The Anti-Modification Provision11-39
- § 11:4.2 : Fallout from the Subprime Crisis and Possible Intervention by Congress or State Legislatures11-40
- [A] : Congressional Activity11-40
- [B] : Judicial Intervention: The Fremont Decision11-42
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Chapter 12: |
Tax Issues Highlighted by the Credit Crisis |
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- § 12:1 : Introduction12-2
- § 12:2 : General Tax Consequences of Transactions Involving Distressed Debt Instruments12-3
- § 12:2.1 : Holding Debt Instruments That Become Credit Impaired12-3
- [A] : Accrual of Interest and OID on Distressed Debt Instruments12-4
- [B] : Deducting Losses on Bad Debts and Worthless Securities12-5
- § 12:2.2 : Acquiring Distressed Debt Instruments—Market Discount12-6
- § 12:2.3 : Modifying, Settling, and Foreclosing on Distressed Debt Instruments12-10
- [A] : Modifying Distressed Debt Instruments—Code Section 100112-10
- [A][1] : Significant Modifications12-10
- [A][2] : Consequences of a Deemed Exchange12-13
- § 12:3 : Taxation of Investments in Distressed Debt Obligations by Offshore Investors12-16
- § 12:3.1 : U.S. Net Income Taxation of Offshore Funds12-17
- § 12:3.2 : FDAP Withholding Tax12-20
- § 12:3.3 : Application of U.S. Tax Treaties12-22
- § 12:3.4 : Taxation of Gain on USRPIs12-24
- § 12:3.5 : U.S. Real Property Received in Foreclosure or Settlement12-26
- § 12:4 : REMIC Modifications of Mortgage Loans12-26
- § 12:5 : Conclusions12-29
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Chapter 13: |
Banking and Consumer Credit Regulation |
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- § 13:1 : Introduction13-3
- § 13:2 : Federal and State Regulation of Residential Mortgage Lending13-3
- § 13:2.1 : Overview13-3
- § 13:2.2 : S.A.F.E. Mortgage Licensing Act of 200813-4
- [A] : Coverage13-4
- [B] : Requirements to Obtain and Maintain a License13-5
- [C] : Federal Banking Agencies13-5
- [D] : Access to Information by Third Parties13-6
- § 13:2.3 : Federal Truth in Lending Act13-6
- [A] : HOEPA13-7
- [A][1] : Substantive Restrictions13-8
- [A][2] : Assignee Liability13-8
- [B] : FRB Rulemaking Under TILA and HOEPA13-9
- [B][1] : Higher-Priced Mortgage Loans13-10
- [B][2] : Ability to Pay the Loan13-11
- [B][3] : Verification of Income and Assets13-12
- [B][4] : Prepayment Penalties13-12
- [B][5] : Escrows for Taxes and Insurance13-12
- [B][6] : Coercion of Appraisers13-13
- [B][7] : Loan Servicing13-13
- [B][8] : Advertising Practices and Disclosures13-14
- [B][9] : Timing of Disclosures13-14
- [B][10] : Mortgage Broker Compensation13-14
- [C] : State Predatory Lending Laws13-15
- [D] : Federal Preemption13-16
- [D][1] : National Banks13-17
- [D][1][a] : OCC Preemption Rule13-17
- [D][1][b] : Operating Subsidiaries13-18
- [D][1][c] : Litigation over Visitorial Powers Rule13-19
- [D][2] : Federal Savings Banks13-21
- § 13:3 : Federal Banking Agencies’ Regulation of Subprime Mortgage Lending13-22
- § 13:3.1 : Earlier Subprime Lending Guidance13-22
- [A] : Subprime Lending Guidance13-23
- [B] : Expanded Guidance on Subprime Lending Programs13-24
- § 13:3.2 : Nontraditional Mortgage Lending Guidance13-25
- [A] : Scope13-25
- [B] : Portfolio and Risk Management Practices13-26
- [C] : Consumer Protection Issues13-27
- [D] : Recommended Practices13-27
- § 13:3.3 : Subprime Mortgage Lending Statement13-28
- [A] : Coverage of the Subprime Mortgage Statement13-28
- [B] : Risk Management Practices13-29
- [C] : Workout Arrangements13-31
- [D] : Consumer Protection Principles13-31
- [D][1] : Prepayment Penalties13-31
- [D][2] : Consumer Disclosure13-32
- [E] : Control Systems13-32
- [F] : Supervisory Review13-33
- § 13:4 : Loan Modification Efforts13-33
- § 13:4.1 : Statement on Working with Borrowers13-33
- § 13:4.2 : Statement on Loss Mitigation13-34
- § 13:4.3 : Private Sector Alternative13-34
- § 13:4.4 : Federal Banking Agency Proposals13-35
- [A] : OTS13-35
- [B] : FDIC13-36
- § 13:4.5 : HOPE for Homeowners Act13-36
- § 13:5 : Oversight of Licensed Mortgage Lenders13-38
- § 13:5.1 : Subprime Mortgage Lending Compliance Reviews13-38
- § 13:5.2 : Model Examination Guidelines for State Licensed Lenders13-39
- § 13:5.3 : FTC Oversight13-39
- [A] : Subprime Mortgage Lending13-40
- [A][1] : First Alliance Mortgage Company13-40
- [A][2] : Fairbanks Capital13-41
- § 13:5.4 : State Foreclosure Restrictions13-41
- [A] : Ohio and New Century Financial Corporation13-42
- [B] : Massachusetts and Fremont Investment and Loan13-42
- § 13:5.5 : Home Valuation Code of Conduct13-43
- § 13:6 : Outlook for Subprime Mortgage Lending13-44
- § 13:6.1 : Federal Legislation13-44
- § 13:6.2 : Lenders and Origination Channels13-45
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Chapter 14: |
United Kingdom |
Ian McDonald ~ |
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- § 14:1 : Relevant Aspects of U.K. Litigation14-3
- § 14:1.1 : Class Actions14-3
- § 14:1.2 : Class Certification and Group Actions14-3
- § 14:1.3 : Contingency Fees and Third Party Litigation Funding14-4
- § 14:1.4 : Costs Follow the Event or “Loser Pays”14-5
- § 14:1.5 : No Jury Trial14-5
- § 14:1.6 : No Punitive Damages14-6
- § 14:1.7 : Pre-action Protocols14-6
- § 14:2 : Potential Claims in the Subprime Arena14-6
- § 14:2.1 : Types of Claims that May Be Brought14-6
- § 14:2.2 : Breach of Contract14-7
- § 14:2.3 : Negligence14-8
- § 14:2.4 : Negligent Misstatement14-9
- § 14:2.5 : Misrepresentation14-9
- § 14:2.6 : Fiduciary Duty14-10
- § 14:2.7 : Civil Claims Arising from Breaches of Regulatory Rules14-11
- § 14:2.8 : Previous CDO-related Claims in the U.K.14-11
- § 14:2.9 : Authorities Relevant to Subprime Related Claims14-12
- § 14:2.10 : Claims Against Investment Managers14-15
- § 14:2.11 : Shareholder Claims: The Principle of Reflective Loss14-16
- § 14:2.12 : Statutory Causes of Action: Financial Services and Markets Act 200014-17
- [A] : Shareholder Actions Under §§ 90 and 90A FSMA14-17
- [B] : Action by the Regulator: Restitution Orders Under §§ 382–384 FSMA14-18
- [C] : Private Actions for Breach of FSA Rules Under § 150 FSMA14-19
- § 14:2.13 : Derivative Actions14-19
- § 14:2.14 : Scheme Liability: Lack of Direct Analogy14-20
- § 14:2.15 : Accessory Liability in Equity14-21
- [A] : Dishonest Assistance14-21
- [B] : Knowing Receipt14-22
- § 14:2.16 : Accessory Liability in Tort14-22
- § 14:2.17 : Insolvency—Fraudulent Trading (§ 213 Insolvency Act 1986)14-23
- § 14:3 : Points Relevant to Dealing with Insurance Claims14-23
- § 14:3.1 : What Insurance Does the Business Have?14-23
- § 14:3.2 : Is There Coverage for Subprime Exposure?14-23
- § 14:3.3 : What Is the Maximum Limit of Cover?14-24
- § 14:3.4 : What, When and to Whom Does Any Notification Have to Be Made?14-24
- § 14:3.5 : Should Insurers Be Consulted About Strategy?14-24
- § 14:3.6 : Renewal Considerations14-25
- § 14:3.7 : Disclosure of Defendant’s Insurance Arrangements14-25
- § 14:4 : U.K. Mortgage Regulation14-26
- § 14:4.1 : Scope of Service14-27
- § 14:4.2 : Disclosure14-28
- § 14:4.3 : Suitability14-28
- § 14:4.4 : Record Keeping14-29
- § 14:4.5 : FSA Mortgage Market Reviews and Enforcement14-30
- § 14:5 : FSA Concerns Regarding Valuation of Complex Structured Products14-32
- § 14:6 : Regulatory Investigations14-32
- § 14:7 : Memoranda of Understanding14-33
- § 14:8 : IOSCO Task Force14-34
- § 14:9 : Committee of European Securities Regulators Review of Credit Rating Agencies14-35
- § 14:10 : Northern Rock—Summary of Collapse and Ensuing Legislative Measures14-37
- § 14:10.1 : Bank’s Problems14-37
- § 14:10.2 : Emergency Liquidity Assistance and the Provision of Guarantees14-38
- § 14:10.3 : Strategic Review and Temporary Public Ownership14-39
- § 14:10.4 : Provisional Restructuring Plan14-39
- § 14:11 : Treasury Committee Report14-40
- § 14:12 : Bankruptcy14-43
- § 14:12.1 : Proposed Changes to the Law14-43
- § 14:12.2 : Reducing the Impact of Failing Banks on Financial Stability—the Special Resolution Regime14-43
- § 14:12.3 : Partial Transfers and the Special Bank Administration Procedure14-45
- § 14:12.4 : A New Bank Insolvency Procedure14-46
- § 14:12.5 : Industry Funding of the SRR14-47
- § 14:12.6 : Next Steps in Consultation Process14-47
- Appendix 14A : FSA Enforcement Action Against Mortgage IntermediariesApp. 14A-1
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Chapter 15: |
Accounting Issues—An Overview |
James R. Mountain ~
Ann M. Kenyon ~ |
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- § 15:1 : Sale vs. Financing Accounting for Securitization Transactions15-2
- § 15:1.1 : Legal Isolation (SFAS 140, ¶ 9a)15-3
- § 15:1.2 : Buyer’s Control (SFAS 140, ¶ 9b)15-4
- § 15:1.3 : No Retained Seller Control (SFAS 140, ¶ 9c)15-5
- § 15:1.4 : Upcoming FASB Changes15-6
- § 15:2 : Consolidation of Securitization Vehicles15-6
- § 15:2.1 : QSPEs (SFAS 140, ¶ 35, etc.)15-6
- § 15:2.2 : VIEs (FIN 46R)15-8
- § 15:2.3 : Upcoming FASB Changes15-9
- § 15:3 : Investor Accounting15-10
- § 15:3.1 : Symmetry Between Seller and Buyer Accounting15-10
- § 15:3.2 : Accounting for Consolidated Securitization Vehicles15-11
- § 15:3.3 : Fair Value vs. Amortized Historical Basis vs. LOCOM15-12
- § 15:3.4 : Fair Value Election (SFAS 159)15-14
- § 15:3.5 : Fair Value Required15-14
- [A] : Securities Accounting (SFAS 115) and (SFAS 140, ¶ 14)15-14
- [A][1] : Trading Classification15-15
- [A][2] : Available for Sale15-16
- [B] : Derivatives and Embedded Derivatives (SFAS 133)15-16
- § 15:3.6 : Amortized Historical Basis and LOCOM15-18
- [A] : Securities Held to Maturity and Loans Held for Investment15-18
- [B] : Loans Held for Sale15-19
- [C] : EITF 99-2015-19
- [D] : Other Realized Impairment Losses15-21
- § 15:4 : Seller’s Ongoing Accounting15-23
- § 15:4.1 : Sale15-23
- [A] : Retained Interests—Day One and Day Two15-24
- [B] : Servicing15-25
- § 15:4.2 : Financing15-26
- § 15:5 : Fair Value Issues (SFAS 157)15-27
- § 15:5.1 : Basic Principle of Exit Value15-27
- § 15:5.2 : Definition of Levels 1, 2 and 315-28
- § 15:5.3 : Problems for Level 3 in Illiquid Markets15-29
- § 15:5.4 : Level 3 Disclosures15-30
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Chapter 16: |
The Over-the-Counter Derivatives Market and the Credit Crisis |
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Index |
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