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THIS IS THE AMENDED COMPLAINT FILED BY DEUTSCHE (INCLUDES EXHIBITS)
FDIC has to face $10 billion WaMu-related lawsuit
WILMINGTON, Delaware | Tue Aug 23, 2011 5:55pm EDT
(Reuters) - A federal judge ruled that the Federal Deposit Insurance Corp has to face a $10 billion lawsuit tied to the failure of Washington Mutual Bank.
The judge refused the FDIC's request to dismiss the lawsuit brought by Deutsche Bank National Trust Co over bad mortgages that were securitized by Washington Mutual.
Washington Mutual, or WaMu, was seized by the Office of Thrift Supervision in September 2008 in the biggest bank failure in U.S. history.
The FDIC was appointed receiver and immediately sold the bank to JPMorgan Chase & Co for $1.9 billion.
The Deutsche Bank unit filed its lawsuit in 2009 arguing that loans that were pooled into mortgage bonds did not meet the underwriting standards that had been promised by WaMu, causing investors to lose billions of dollars.
A Senate committee report this year said WaMu's mortgage securitization was "polluting the financial system" with bad home loans and partly to blame for the 2008 financial crisis.
The FDIC argued it should be dismissed from the lawsuit and Deutsche Bank should bring its claims against JPMorgan, which assumed WaMu's liabilities as well as assets.
JPMorgan has denied it assumed any WaMu liabilities.
Judge Rosemary Collyer of the U.S. District Court denied the government agency's request last week. She said it would be "improvident and premature" to dismiss the FDIC from the lawsuit after refusing a similar request by JPMorgan.
A spokesman for the FDIC did not immediately respond to a request for comment.
The case is Deutsche Bank National Trust Co v Federal Deposit Insurance Corp et al; U.S. District Court for the District of Columbia, No. 09-1656.
(Reporting by Tom Hals, editing by Matthew Lewis)
RECENTLY
Full docket text:
MINUTE ORDER denying [54] Defendant Federal Deposit Insurance Corporation's (FDIC) Motion to Dismiss without prejudice. This is a lawsuit seeking a money judgment for hundreds of mortgage-backed securities that originated with the failed Washington Mutual Bank (WaMu). One of the basic questions is whether the Purchase and Assumption Agreement between Defendant JP Morgan Chase (JPMC) and FDIC, by which JPMC acquired certain WaMu assets and liabilities, left these alleged liabilities with the FDIC or transferred them to JPMC. Having denied the Motion to Dismiss filed by JPMC [55] and scheduled discovery on the meaning of the Purchase and Assumption Agreement and assignment of liability by Order on May 12, 2011 [69], the Court finds that it would be improvident and premature to decide the Motion to Dismiss filed by the FDIC [54], and thus DENIES the FDIC's motion without prejudice. Signed by Judge Rosemary M. Collyer on 8/17/2011.(lcrmc1)
________________________________________
Titolo originale
FDIC FACES $10BILLION LAWSUIT -- DEUTSCHE BANK V FDIC, CHASE, WAMU AMENDED COMPLAINT AND EXHIBITS FILED 09/2010
THIS IS THE AMENDED COMPLAINT FILED BY DEUTSCHE (INCLUDES EXHIBITS)
FDIC has to face $10 billion WaMu-related lawsuit
WILMINGTON, Delaware | Tue Aug 23, 2011 5:55pm EDT
(Reuters) - A federal judge ruled that the Federal Deposit Insurance Corp has to face a $10 billion lawsuit tied to the failure of Washington Mutual Bank.
The judge refused the FDIC's request to dismiss the lawsuit brought by Deutsche Bank National Trust Co over bad mortgages that were securitized by Washington Mutual.
Washington Mutual, or WaMu, was seized by the Office of Thrift Supervision in September 2008 in the biggest bank failure in U.S. history.
The FDIC was appointed receiver and immediately sold the bank to JPMorgan Chase & Co for $1.9 billion.
The Deutsche Bank unit filed its lawsuit in 2009 arguing that loans that were pooled into mortgage bonds did not meet the underwriting standards that had been promised by WaMu, causing investors to lose billions of dollars.
A Senate committee report this year said WaMu's mortgage securitization was "polluting the financial system" with bad home loans and partly to blame for the 2008 financial crisis.
The FDIC argued it should be dismissed from the lawsuit and Deutsche Bank should bring its claims against JPMorgan, which assumed WaMu's liabilities as well as assets.
JPMorgan has denied it assumed any WaMu liabilities.
Judge Rosemary Collyer of the U.S. District Court denied the government agency's request last week. She said it would be "improvident and premature" to dismiss the FDIC from the lawsuit after refusing a similar request by JPMorgan.
A spokesman for the FDIC did not immediately respond to a request for comment.
The case is Deutsche Bank National Trust Co v Federal Deposit Insurance Corp et al; U.S. District Court for the District of Columbia, No. 09-1656.
(Reporting by Tom Hals, editing by Matthew Lewis)
RECENTLY
Full docket text:
MINUTE ORDER denying [54] Defendant Federal Deposit Insurance Corporation's (FDIC) Motion to Dismiss without prejudice. This is a lawsuit seeking a money judgment for hundreds of mortgage-backed securities that originated with the failed Washington Mutual Bank (WaMu). One of the basic questions is whether the Purchase and Assumption Agreement between Defendant JP Morgan Chase (JPMC) and FDIC, by which JPMC acquired certain WaMu assets and liabilities, left these alleged liabilities with the FDIC or transferred them to JPMC. Having denied the Motion to Dismiss filed by JPMC [55] and scheduled discovery on the meaning of the Purchase and Assumption Agreement and assignment of liability by Order on May 12, 2011 [69], the Court finds that it would be improvident and premature to decide the Motion to Dismiss filed by the FDIC [54], and thus DENIES the FDIC's motion without prejudice. Signed by Judge Rosemary M. Collyer on 8/17/2011.(lcrmc1)
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THIS IS THE AMENDED COMPLAINT FILED BY DEUTSCHE (INCLUDES EXHIBITS)
FDIC has to face $10 billion WaMu-related lawsuit
WILMINGTON, Delaware | Tue Aug 23, 2011 5:55pm EDT
(Reuters) - A federal judge ruled that the Federal Deposit Insurance Corp has to face a $10 billion lawsuit tied to the failure of Washington Mutual Bank.
The judge refused the FDIC's request to dismiss the lawsuit brought by Deutsche Bank National Trust Co over bad mortgages that were securitized by Washington Mutual.
Washington Mutual, or WaMu, was seized by the Office of Thrift Supervision in September 2008 in the biggest bank failure in U.S. history.
The FDIC was appointed receiver and immediately sold the bank to JPMorgan Chase & Co for $1.9 billion.
The Deutsche Bank unit filed its lawsuit in 2009 arguing that loans that were pooled into mortgage bonds did not meet the underwriting standards that had been promised by WaMu, causing investors to lose billions of dollars.
A Senate committee report this year said WaMu's mortgage securitization was "polluting the financial system" with bad home loans and partly to blame for the 2008 financial crisis.
The FDIC argued it should be dismissed from the lawsuit and Deutsche Bank should bring its claims against JPMorgan, which assumed WaMu's liabilities as well as assets.
JPMorgan has denied it assumed any WaMu liabilities.
Judge Rosemary Collyer of the U.S. District Court denied the government agency's request last week. She said it would be "improvident and premature" to dismiss the FDIC from the lawsuit after refusing a similar request by JPMorgan.
A spokesman for the FDIC did not immediately respond to a request for comment.
The case is Deutsche Bank National Trust Co v Federal Deposit Insurance Corp et al; U.S. District Court for the District of Columbia, No. 09-1656.
(Reporting by Tom Hals, editing by Matthew Lewis)
RECENTLY
Full docket text:
MINUTE ORDER denying [54] Defendant Federal Deposit Insurance Corporation's (FDIC) Motion to Dismiss without prejudice. This is a lawsuit seeking a money judgment for hundreds of mortgage-backed securities that originated with the failed Washington Mutual Bank (WaMu). One of the basic questions is whether the Purchase and Assumption Agreement between Defendant JP Morgan Chase (JPMC) and FDIC, by which JPMC acquired certain WaMu assets and liabilities, left these alleged liabilities with the FDIC or transferred them to JPMC. Having denied the Motion to Dismiss filed by JPMC [55] and scheduled discovery on the meaning of the Purchase and Assumption Agreement and assignment of liability by Order on May 12, 2011 [69], the Court finds that it would be improvident and premature to decide the Motion to Dismiss filed by the FDIC [54], and thus DENIES the FDIC's motion without prejudice. Signed by Judge Rosemary M. Collyer on 8/17/2011.(lcrmc1)
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Attribution Non-Commercial (BY-NC)
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DEUTSCHE BANK NATIONAL TRUST COMPANY, as Trustee for the Trusts listed in Exhibits 1-A and 1-B,
Plaintiff,
v.
FEDERAL DEPOSIT INSURANCE CORPORATION, as receiver for Washington Mutual Bank; JPMORGAN CHASE BANK, National Association; and WASHINGTON MUTUAL MORTGAGE SECURITIES CORPORATION,
Defendants.
JURY TRIAL DEMANDED
AMENDED COMPLAINT Plaintiff Deutsche Bank National Trust Company, as trustee for the Trusts listed in Exhibits 1-A and 1-B (DBNTC or the Trustee), for its Amended Complaint (Complaint) against the Federal Deposit Insurance Corporation, as receiver for Washington Mutual Bank; JPMorgan Chase Bank, National Association; and Washington Mutual Mortgage Securities Corporation (collectively the Defendants), upon information and belief, alleges as follows: PARTIES 1. DBNTC is a national banking association organized under the laws of the United States of America to carry on the business of a limited purpose trust company. DBNTCs main office and principal place of business is located at 300 South Grand Avenue, Suite 3950, Los Angeles, California 90071, and the principal site of its trust administration is located at 1761 East St. Andrew Place, Santa Ana, California 97025. 2. DBNTC serves as trustee and in various other related capacities for 99 trusts (the Primary Trusts) created, sponsored, and/or serviced by Washington Mutual Bank, its Case 1:09-cv-01656-RMC Document 32 Filed 09/08/10 Page 1 of 44
2 subsidiaries, their predecessors-in-interest and their affiliates, including Washington Mutual Mortgage Securities Corporation (WMB). See Exhibit 1-A. The Primary Trusts provide for the issuance of residential mortgage-backed securities and certain other mortgage-related securities. The Primary Trusts currently hold, as trust assets or collateral, mortgage loans originated or acquired by WMB and sold into the Primary Trusts. 3. DBNTC also serves as indenture trustee or in other capacities for 28 secondary trusts or entities through which WMB issued mortgage-backed or derivative securities whose performance is dependent, in whole or in part, on the performance of the Primary Trusts or of other residential mortgage-backed securities issued by WMB (the Secondary Trusts). See Exhibit 1-B. The Secondary Trusts are express or implied third-party beneficiaries of the Primary Trusts and, as such, have standing to enforce the terms and conditions thereof. See, e.g., Pooling and Servicing Agreement for Long Beach Mortgage Loan Trust, Series 2005-3, passim (Issue ID No. LB0503) (voting, consent, payment and other rights of NIM Insurer, Other NIM Notes and Holders of Class C and Class P Certificates); Indenture Agreement for Long Beach Asset Holding Corp. CI 2005-03 (Issue ID No. LB05N5) (Granting Clause conveying LB2005-3 Class C and Class P Underlying Certificates as Trust Estate; 1.01, definition of Underlying Agreement and Underlying Certificates; Article 6, Administration of the Trust Estate; 9.11, Certain Representations Regarding the Trust Estate). The Primary Trusts, and the Secondary Trusts, as appropriate, are referred to herein collectively as the Trusts. 4. The Primary Trusts original principal balance outstanding was approximately $165 billion. As of September 25, 2008, the Primary Trusts current principal balance outstanding was approximately $45 billion. As of September 2, 2010, the Primary Trusts current principal balance outstanding was approximately $34 billion. Case 1:09-cv-01656-RMC Document 32 Filed 09/08/10 Page 2 of 44
3 5. The Trustee brings this action on behalf of the Trusts and the investors in the Trusts. 6. The Trusts are express trusts created by written instruments manifesting the express intention to create a trust and setting forth the subject, purpose and beneficiaries of the Trusts. The Trustee therefore brings this action pursuant to Federal Rule of Civil Procedure 17(a)(1)(E) as the trustee of an express trust for the benefit of the Trusts and the investors in the Trusts. 7. The Federal Deposit Insurance Corporation (FDIC) is an independent agency of the United States created by the Federal Deposit Insurance Act (the FDI Act), 12 U.S.C. 1811 et seq., and related laws and regulations. The FDIC acts, from time-to-time and among other things, as a receiver for and/or conservator of banking institutions. The Trustee brings this action against the FDIC solely in its capacity as receiver for WMB. 8. JPMorgan Chase Bank, National Association (collectively, with its affiliates, including but not limited to Washington Mutual Mortgage Securities Corporation, JPMC) is a national banking association under the provisions of federal law, pursuant to the National Bank Act, 12 U.S.C. 21 et seq., with its principal place of business in Columbus, Ohio. JPMC maintains an office at 800 Connecticut Avenue NW, Washington, DC 20006. JPMC is a wholly- owned subsidiary of JPMorgan Chase & Co., a corporation organized under the laws of the state of Delaware. 9. Washington Mutual Mortgage Securities Corporation (WMMSC) is a Delaware corporation. WMMSC was a wholly-owned subsidiary of WMB, and is currently a wholly- owned subsidiary of JPMC. Case 1:09-cv-01656-RMC Document 32 Filed 09/08/10 Page 3 of 44
4 10. WMB was the United States largest savings and loan association with total assets of over $300 billion as of June 30, 2008. On September 25, 2008, the Director of the Office of Thrift Supervision (OTS), by Order Number 2008-36, shut down WMB and appointed the FDIC as receiver for WMB. 11. On September 25, 2008, JPMC entered into a Purchase and Assumption Agreement dated as of the same day (the PAA) with the FDIC, under which JPMC agreed to purchase substantially all of WMBs assets and assume substantially all of its liabilities (including WMMSC). The PAA was facilitated by the FDIC and the FDIC was a party to the PAA in both its corporate capacity and as receiver for WMB. The PAA is incorporated herein by reference and attached hereto as Exhibit 2. 12. In connection with JPMCs purchase of WMB, JPMC conducted a due diligence review of WMB, including a review of WMBs loan tapes and data and discussions with WMB employees. 13. The Trustee originally brought this action against the FDIC, as receiver for WMB. The FDIC now asserts that all of the liabilities with respect to the claims asserted by the Trustee on behalf of the Trusts have been assumed by JPMC. JPMC denies that it has assumed these liabilities. The Trustee thus brings this action against WMB and its successors or successors-in- interest, whoever they are adjudicated to be (collectively, WaMu). THE PROOF OF CLAIM AND ORIGINAL COMPLAINT 14. On December 30, 2008, the Trustee timely filed with the FDIC a Proof of Claim on behalf of the Trusts and the Trustee pursuant to 12 U.S.C. 1821(d). The Proof of Claim, which is incorporated herein by reference and attached hereto as Exhibit 3, sets forth various claims against the FDIC relating to the Trusts. Case 1:09-cv-01656-RMC Document 32 Filed 09/08/10 Page 4 of 44
5 15. Pursuant to 12 U.S.C. 1821(d)(5)(A)(i), the FDIC should have determined whether to allow or disallow the Trustees Proof of Claim within 180 days of December 30, 2008. 16. Pursuant to 12 U.S.C. 1821(d)(5)(A)(iv), the FDIC was further required to give the Trustee notice of disallowance of its claims, which notice was required to contain a statement of each reason for the disallowance and the procedures available for obtaining agency review of the determination to disallow the claim or judicial determination of the claim. 17. The FDIC failed to respond to the Proof of Claim and failed to issue any notice of disallowance to the Trustee. 18. Pursuant to 12 U.S.C. 1821(d)(6)(A)(i), the FDICs failure to respond timely to the Proof of Claim triggered the Trustees right to file suit on such claim in the district or territorial court of the United States for the district within which the depository institutions principal place of business is located or the United States District Court for the District of Columbia (and such court shall have jurisdiction to hear such claim) within 60 days thereafter. 19. On August 26, 2009, the Trustee timely filed this action against the FDIC as receiver for WMB. JURISDICTION AND VENUE 20. This action arises under the FDI Act, 12 U.S.C. 1811 et seq., as amended. The claims raised herein include, without limitation, an appeal from the FDICs rejection, pursuant to 12 U.S.C. 1821(d)(6), of the Proof of Claim by virtue of the FDICs failure to respond to the Proof of Claim. The statutorily-prescribed proper forum for jurisdiction and venue for such an appeal expressly includes the United States District Court for the District of Columbia. 12 Case 1:09-cv-01656-RMC Document 32 Filed 09/08/10 Page 5 of 44
6 U.S.C. 1821(d)(6). This Court has jurisdiction over the subject matter of this action pursuant to 12 U.S.C. 1819(b)(2)(A), 1821(d)(6) and 28 U.S.C. 1331. 21. The FDIC takes the position in its motion to dismiss the initial complaint (docket entry 20) that, pursuant to the PAA, the FDIC transferred to JPMC, and JPMC expressly agreed to assume, all of WaMus Trust-related liabilities and obligations, including liability for all Trust-related claims asserted in this action by the Trustee. The PAA was entered into pursuant to and in furtherance of the federal statutory provisions governing the FDICs administration of the receivership of WMB. Determination of the relative rights and responsibilities of the FDIC and JPMC under the PAA is therefore a federal question pursuant to 12 U.S.C. 1819(b)(2)(A), 1821(d)(6) and 28 U.S.C. 1331. 22. This Court also has jurisdiction over the subject matter of this action pursuant to 28 U.S.C. 1332. 23. This Court also has jurisdiction over the state law claims in this action pursuant to 28 U.S.C. 1367. 24. Venue is proper in this Court pursuant to 12 U.S.C. 1821(d)(6) and 28 U.S.C. 1391(e). BACKGROUND A. The Trusts 25. WaMu sponsored and/or otherwise participated in the issuance of mortgage- backed securities pursuant to which WaMu sold investors interests in residential mortgage loans originated by WaMu or by third party loan originators from whom WaMu had acquired loans. These securities are commonly referred to as Residential Mortgage-Backed Securities or RMBS. Case 1:09-cv-01656-RMC Document 32 Filed 09/08/10 Page 6 of 44
7 26. Many RMBS, including most of the securities issued by the Trusts, are established under a provision of the Tax Code allowing for the creation of a Real Estate Mortgage Investment Conduit (a REMIC), which allows the issuance of multiple classes of securities in trust certificate form, with monthly payments and no residual equity, that are treated as debt for tax purposes (plus an equity-like class called the residual interest). See Internal Revenue Code 860A-860G. 27. Securitization is a common financing tool used to pool and convert financial assets such as residential mortgages into financial instruments that can be sold in the capital markets. Between 2000 and 2007, WaMu securitized approximately $77 billion in principal amount of subprime home mortgage loans. 28. Although the exact structures of RMBS transactions are varied and can be fairly complex, the structure of the Primary Trusts, as well as most RMBS transactions, involves the following parties: a. Depositor and Seller: The depositor is the entity that acquires the pool of mortgage loans and deposits the loans in a trust formed by the depositor pursuant to the governing documents for the transaction. The depositor assigns the legal and beneficial interest in the mortgage loans, including related collateral, to the trust. In many RMBS transactions, the depositor purchases the mortgage loans from another entity, referred to as the seller, and deposits the pool of loans into the trust. As set forth in Exhibit 1-A, with respect to the Primary Trusts, WaMu served as the Depositor and/or Seller for 97 of the 99 Primary Trusts. Through a series of assignments and other agreements, WaMu indirectly undertook responsibilities substantially similar to those of a Depositor or Seller for the remaining two Primary Trusts. See Exhibit 1-A, n.1. Case 1:09-cv-01656-RMC Document 32 Filed 09/08/10 Page 7 of 44
8 b. The Trust: The trust purchases the mortgage loans from the depositor and issues RMBS, which represent specific interests in and entitlements to the cash flows derived from the trusts assets (i.e., the mortgage loans). The governing documents forming the trust typically appoint an independent trustee and specify the trustees rights, responsibilities and powers in respect of the RMBS transaction. c. Investors: By purchasing RMBS, investors acquire the right to receive monies from the cash flows of the underlying mortgage loans held as trust assets or collateral by the trust (in the form of borrower payments of principal and interest and proceeds from the liquidation of loan collateral). Those cash flows are applied to payment of the RMBS pursuant to a contractually specified distribution plan and schedule. d. Servicer: The servicer is the day-to-day administrator of the mortgage loan assets held by the trust. Under the governing documents forming the trust, the servicer is required to administer the mortgage loans in the best interests of RMBS investors. The servicers responsibilities include collecting payments due from the borrowers, remitting those payments to the trust for ultimate payment to the investors, and furnishing the trustee or a securities administrator with performance data regarding the mortgage loans in the pool. The servicer-generated data is used to calculate the distribution of funds and report pool performance to investors. The servicer also conducts all remedial activity on behalf of the trust when borrowers default on their loans. Such remedial servicing activity requires the servicer to review relevant loan files, act as the trusts sole source of contact with the borrower, and inquire into the status of the borrower and the mortgage loan collateral. As set forth in Exhibit 1-A, WaMu is the Case 1:09-cv-01656-RMC Document 32 Filed 09/08/10 Page 8 of 44
9 Servicer or Master Servicer for the mortgage loans included in the Primary Trusts, in addition to serving as the Depositor and Seller as set forth above. B. WaMus Contractual Obligations (1) The Governing Documents for the Trusts 29. The duties and responsibilities of the various parties to an RMBS transaction are set forth in the governing securitization documents. These documents generally include a mortgage loan purchase agreement (MLPA) and a pooling and servicing agreement (PSA). The MLPA and PSA provide for the sale of the mortgage loans and contain representations, warranties and covenants made by the seller and/or depositor concerning the nature, characteristics, history and quality of the mortgage loans and mortgage loan files sold to, and deposited in, the trusts. These documents also provide for the establishment and administration of the trust, including setting forth the responsibilities and duties of the depositor, trustee, seller, and servicer with respect to the trust. 30. The PSAs and MLPAs for the Primary Trusts are listed in Exhibit 1-A. The relevant agreements for the Secondary Trusts are listed in Exhibit 1-B. Electronic copies of the documents referenced in Exhibits 1-A and 1-B are being submitted to the Court and the parties as Exhibit 4 and are incorporated herein by reference. The PSAs and MLPAs for the Primary Trusts and the relevant agreements for the Secondary Trusts (each a Governing Document and collectively, with all related ancillary documents and agreements for the Trusts, the Governing Documents) contain representations, warranties and covenants made by WaMu, as Seller and/or Depositor, concerning the nature, characteristics, history and quality of the mortgage loans and mortgage loan files sold to, and deposited in, the Trusts (the Representations and Warranties). Case 1:09-cv-01656-RMC Document 32 Filed 09/08/10 Page 9 of 44
10 The Governing Documents assign to the Trustee the right to enforce the Representations and Warranties for the benefit of the Trusts beneficiaries. 31. The Governing Documents represent an integrated set of contractual undertakings on behalf of WaMu with respect to the formation of the Trusts and the servicing by WaMu of the loans sold to, and deposited in, the Trusts. 32. Each Governing Document is a unitary contract that is not divisible. 33. The Governing Documents are executory contracts that involve obligations that are ongoing, mutual, and interrelated. 34. The Governing Documents are fully integrated Qualified Financial Contracts under 12 U.S.C. 1821(e)(8)(D) and, as such, they must be transferred or retained in whole by the FDIC as receiver for WMB. 12 U.S.C. 1821(e)(9)(i)-(ii). 35. 12 U.S.C. 1821(e)(2) requires the FDIC to make any determination to repudiate or dissafirm a contract of a failed institution for which it acts as receiver within a reasonable time following its appointment as receiver. 36. The FDIC has not within a reasonable time made a determination to exercise any right, as receiver for WMB, to repudiate or disaffirm any Governing Document pursuant to 12 U.S.C. 1821(e)(1). 37. Given the passage of two years since the FDIC was appointed as receiver for WMB, the FDIC can no longer make such determination to repudiate or dissafirm within a reasonable time following its appointment and is now barred from repudiating or disaffirming any Governing Document. 38. The PAA expressly provides that JPMC specifically assumes all mortgage servicing rights and obligations of [WMB]. PAA (Exhibit 2), 2.1. Case 1:09-cv-01656-RMC Document 32 Filed 09/08/10 Page 10 of 44
11 39. The FDIC assigned to JPMC, and JPMC has assumed, all mortgage servicing rights and obligations of WaMu to the extent provided in the PAA. 40. The mortgage servicing rights and obligations of WaMu with respect to the Trusts arose under the Governing Documents. 41. To assign to JPMC any rights and obligations under the Governing Documents, the FDIC, as receiver for WMB, was required first to assume, and not repudiate or disaffirm, such Governing Documents. 42. The Governing Documents: a. are all in writing; b. were all executed by WaMu and DBNTC, as Trustee, at the time the associated property interests were transferred; c. were executed on behalf of WaMu by individuals duly authorized by the applicable WaMu entitys Board of Directors; d. have been continuously in existence, since the time of execution, and constitute official books and records of WaMu; and e. constituted official books and records of WMB at the time of WMBs closing on September 25, 2008. 43. WaMus obligations under the Governing Documents include both the Representations and Warranties as well as continuing obligations that require WaMu to, among other things: (i) give prompt written notice to the Trustee and other parties of any breach of the Representations and Warranties that has a material and adverse effect on the value of the mortgage loans in the Trusts or the interests of the Trusts therein; (ii) cure the breach of the Representations and Warranties in all material respects, repurchase the mortgage loans at a Case 1:09-cv-01656-RMC Document 32 Filed 09/08/10 Page 11 of 44
12 specified repurchase price, or substitute for the affected mortgage loans; (iii) provide the Trustee and other parties with access to all records maintained by WaMu as Servicer in respect of WaMus rights and obligations under the Governing Documents and access to officers of WaMu responsible for such obligations; and (iv) to indemnify the Trustee for any losses or expenses incurred by the Trustee in, among other things, enforcing the rights of the Trusts and their beneficiaries. 44. As Seller, Depositor and/or Servicer, WaMu has possession of documents and other information concerning the mortgage loans in the Trusts that are not in the possession of the Trustee or other parties acting on behalf of the Trusts, which documents may confirm whether a particular mortgage loan in the Trusts is in breach of any of the Representations and Warranties. Such documents and other information includes origination and underwriting files, servicing records, borrower statements both recorded on tape and transcribed into servicing notes, borrower statements made during the origination of the loan, payment histories, and borrower correspondence. (2) WaMus Representations and Warranties 45. In connection with each of the Primary Trusts, WaMu, in its various capacities, made Representations and Warranties in the Governing Documents for each of the Primary Trusts. While the specific Representations and Warranties made by WaMu, as Seller and/or Depositor or in various other capacities, are not identical for each of the Primary Trusts, they generally include Representations and Warranties by WaMu regarding the underwriting of the mortgage loans, the loan to value ratios for the mortgage loans, and compliance of the loans with local, state and federal laws. Case 1:09-cv-01656-RMC Document 32 Filed 09/08/10 Page 12 of 44
13 46. By way of example, Section 6 of the MLPA for the Long Beach Mortgage Loan Trust, Series 2006-2 (Issue ID No. LB0602) (the LB0602 Trust), which contains the Representations and Warranties of the Seller Relating to the Individual Mortgage Loans, provides that WaMu represents and warrants with respect to the mortgage loans sold to, and deposited in, the LB0602 Trust that: a. 6(vi) There is no valid offset, defense or counterclaim to any Mortgage Note (including any obligation of the Mortgagor to pay the unpaid principal of or interest on such Mortgage Note) or the Mortgage, nor will the operation of any of the terms of the Mortgage Note and the Mortgage, or the exercise of any right thereunder, render the Mortgage Note or the Mortgage unenforceable, in whole or in part, or subject to any right of rescission, set-off, counterclaim or defense, including the defense of usury and no such right of rescission, set-off, counterclaim or defense has been asserted with respect thereto; b. 6(ix) Each Mortgage Loan at origination complied in all material respects with applicable local, state and federal laws, including, without limitation, predatory and abusive lending, usury, equal credit opportunity, real estate settlement procedures, truth-in-lending and disclosure laws, and consummation of the transactions contemplated hereby, including without limitation the receipt of interest does not involve the violation of any such laws; c. 6(xvii) The Mortgage Note and the related Mortgage are genuine, and each is the legal, valid and binding obligation of the Mortgagor enforceable against the Mortgagor by the mortgagee or its representative in accordance with its terms, except only as such enforcement may be limited by bankruptcy, insolvency, Case 1:09-cv-01656-RMC Document 32 Filed 09/08/10 Page 13 of 44
14 reorganization, moratorium or other similar laws affecting the enforcement of creditors rights generally and by law. To the best of the Sellers knowledge, all parties to the Mortgage Note and the Mortgage had full legal capacity to execute all Mortgage Loan documents and to convey the estate purported to be conveyed by the Mortgage and each Mortgage Note and Mortgage have been duly and validly executed by such parties; d. 6(xxii) The origination, underwriting and collection practices used by the Seller with respect to each Mortgage Loan have been in all material respects legal, proper, prudent and customary in the subprime mortgage servicing business. Each Mortgage Loan is currently being serviced by Washington Mutual Bank; e. 6(xxviii) There is no default, breach, violation or event of acceleration existing under the Mortgage or the related Mortgage Note; and neither the Seller nor any other entity involved in originating or servicing the Mortgage Loan has waived any default, breach, violation or event of acceleration; f. 6(xxxii) Each Mortgage Loan was underwritten in accordance with the Sellers underwriting guidelines as described in the Prospectus Supplement as applicable to its credit grade in all material respects (the Underwriting Guidelines); g. 6(xxxiii) Each appraisal of a Mortgage Loan that was used to determine the appraised value of the related Mortgaged Property was conducted generally in accordance with the Sellers Underwriting Guidelines, and included an assessment by the appraiser of the fair market value of the related Mortgaged Case 1:09-cv-01656-RMC Document 32 Filed 09/08/10 Page 14 of 44
15 Property at the time of the appraisal. The Mortgage File contains an appraisal of the applicable Mortgaged Property; h. 6(xxxv) There are no Mortgage Loans with respect to which the monthly payment due thereon in January, 2006 had not been made, none of the Mortgage Loans has been contractually delinquent for more than 30 days more than once during the preceding twelve months and, no Mortgage Loan has ever experienced a delinquency of 60 or more days since the origination thereof; i. 6(xxxvii) To the best of the Sellers knowledge, no misrepresentation, negligence, fraud or similar occurrence with respect to a Mortgage Loan has taken place on the part of any person, including, without limitation, the Mortgagor, any appraiser, any builder or developer, or any other party involved in the origination of the Mortgage Loan or in the application of any insurance in relation to such Mortgage Loan; j. 6(xl) The Loan-to-Value Ratio for each Mortgage Loan was no greater than 100% at the time of origination; k. 6(xlii) With respect to each Mortgage Loan, the related Mortgagor shall not fail or has not failed to make the first monthly payment due under the terms of the Mortgage Loan by the second succeeding Due Date after the Due Date on which such monthly payment was due; l. 6(xliv) There are no defaults in complying with the terms of the Mortgage, and either (1) any taxes, governmental assessments, insurance premiums, water, sewer and municipal charges or ground rents which previously became due and owing have been paid, or (2) an escrow of funds has been established in an Case 1:09-cv-01656-RMC Document 32 Filed 09/08/10 Page 15 of 44
16 amount sufficient to pay for every such item which remains unpaid and which has been assessed but is not yet due and payable. Except for payments in the nature of escrow payments, including without limitation, taxes and insurance payments, the Seller has not advanced funds, or induced, solicited or knowingly received any advance of funds by a party other than the Mortgagor, directly or indirectly, for the payment of any amount required by the Mortgage Note, except for interest accruing from the date of the Mortgage Note or date of disbursement of the Mortgage proceeds, whichever is greater, to the day which precedes by one month the Due Date of the first installment of principal and interest; m. 6(xlviii) The Seller did not select the Mortgage Loans with the intent to adversely affect the interests of the Purchaser; and n. 6(lviii) Each Group I Mortgage Loan was originated in compliance with the following anti-predatory lending guidelines: . . . c. The methodology used in underwriting the extension of credit for each Group I Mortgage Loan employs objective mathematical principles which relate the borrowers income, assets and liabilities to the proposed payment and such underwriting methodology does not rely on the extent of the borrowers equity in the collateral as the principal determining factor in approving such credit extension. Such underwriting methodology provided reasonable assurance that at the time of origination (application/approval) the borrower had a reasonable ability to make timely payments on the Group I Mortgage Loan. 47. Attached as Exhibit 5 is an excerpt of Section 6 of the MLPA for the LB0602 Trust cited above. Attached as Exhibit 6 is a chart cross-referencing the fourteen specific Case 1:09-cv-01656-RMC Document 32 Filed 09/08/10 Page 16 of 44
17 Representations and Warranties listed above from Section 6 of the MLPA for the LB0602 Trust with corresponding Representations and Warranties of a substantially similar nature made by WaMu in the Governing Documents for each of the other Primary Trusts. 48. WaMu as the Seller, Depositor and/or Servicer has exclusive possession of the loan origination and servicing records and, as the Servicer charged with enforcing the terms and conditions of mortgage loans on behalf of the Trusts, WaMu would be the first party acting on behalf of the Trusts likely to discover facts and circumstances that constitute a breach of a Representation and Warranty with respect to any particular mortgage loan in the Trusts, and in most circumstances is the only party able to confirm the existence of such a breach. (3) WaMus Notice Obligation 49. The Governing Documents require WaMu, as Seller, Depositor and/or Servicer, to give prompt written notice to the Trustee and other parties upon discovery or notice of any breach of the Representations and Warranties that has a material and adverse effect on the value of the mortgage loans in the Trusts or the interests of the Trusts therein (the Notice Obligation). 50. By way of example, the Notice Obligation of WaMu is set forth in Section 2.08 of the PSA for the Washington Mutual Mortgage Securities Corp. Trust, Series 2002-AR2 (Issue ID No. WA02A2) (the WA02A2 Trust), in pertinent part, as follows: Upon discovery by any of the Company, the Master Servicer, the Trustee or the Custodian of a breach of any of the foregoing representations and warranties which materially and adversely affects the value of the related Mortgage Loans or the interests of the Trust in the related Mortgage Loans, the Company, the Master Case 1:09-cv-01656-RMC Document 32 Filed 09/08/10 Page 17 of 44
18 Servicer, the Trustee or the Custodian, as the case may be, discovering such breach shall give prompt written notice to the others. 51. WaMus Notice Obligation is also set forth in Section 7(a) of the MLPA for the LB0602 Trust, in pertinent part, as follows: Upon discovery by the Seller, the Purchaser or any assignee, transferee or designee of the Purchaser of any materially defective document in, or that any material document was not transferred by the Seller (as listed on the Trustees initial certification), as part of any Mortgage File or of a breach of any of the representations and warranties contained in Section 5 or Section 6 that materially and adversely affects the value of any Mortgage Loan or the interest of the Purchaser or the Purchasers assignee, transferee or designee (it being understood that with respect to the representations and warranties set forth in the last sentence of (xxxix), (xlvi), the first sentence of (xlvii), (lxi) and (lxiv) of Section 6 herein, a breach of any such representation or warranty shall in and of itself be deemed to materially and adversely affect the interest therein of the Purchaser and the Purchasers assignee, transferee or designee) in any Mortgage Loan, the party discovering the breach shall give prompt written notice to the others. 52. Attached as Exhibit 7 is a chart indicating the contractual provisions in the Governing Documents for each of the Primary Trusts setting forth WaMus Notice Obligations with respect to each Primary Trust. (4) WaMus Repurchase Obligation 53. The Governing Documents require WaMu, as Seller and/or Depositor, to cure the defect in the mortgage loan file or breach of the Representations and Warranties in all material Case 1:09-cv-01656-RMC Document 32 Filed 09/08/10 Page 18 of 44
19 respects, repurchase the mortgage loan at a specified repurchase price, or substitute for the affected mortgage loan upon discovery or receipt of notice of any breach of the Representations and Warranties that has a material and adverse effect on the value of the mortgage loans in the Trusts or the interests of the Trusts therein (the Repurchase Obligation). 54. Under the Governing Documents for each Primary Trust, WaMu, as Seller and/or Depositor, has Repurchase Obligations to each Primary Trust. By way of example, the Repurchase Obligation is set forth in Section 2.08 of the PSA for the Washington Mutual Mortgage Securities Corp. Trust, Series 2005-AR1 (Issue ID No. WA05A1) (the WA05A1 Trust), in pertinent part, as follows: It is understood and agreed that the representations and warranties set forth in this Section 2.08 shall survive delivery of the respective Mortgage Files to the Trustee or the Custodian, as the case may be, and shall continue throughout the term of this Agreement. Upon discovery by any of the Company, the Master Servicer, the Trustee or the Custodian of a breach of any of the foregoing representations and warranties which materially and adversely affects the value of the related Mortgage Loans or the interests of the Trust in the related Mortgage Loans, the Company, the Master Servicer, the Trustee or the Custodian, as the case may be, discovering such breach shall give prompt written notice to the others. Any breach of the representation set forth in clause (xxix) or (xxx) of this Section 2.08 shall be deemed to materially and adversely affect the value of the related Mortgage Loans or the interests of the Trust in the related Mortgage Loans. Within 90 days of its discovery or its receipt of notice of breach, the Company shall repurchase, subject to the limitations set forth in the definition of Purchase Case 1:09-cv-01656-RMC Document 32 Filed 09/08/10 Page 19 of 44
20 Price or substitute for the affected Mortgage Loan or Mortgage Loans or any property acquired in respect thereof from the Trust, unless it has cured such breach in all material respects. After the end of the three-month period beginning on the start-up day, any such substitution shall be made only if the Company provides to the Trustee an Opinion of Counsel addressed to the Trust and the Trustee reasonably satisfactory to the Trustee that each Substitute Mortgage Loan will be a qualified replacement mortgage within the meaning of Section 860G(a)(4) of the Code. Such substitution shall be made in the manner and within the time limits set forth in Section 2.07. Any such repurchase by the Company shall be accomplished in the manner and at the Purchase Price if applicable, but shall not be subject to the time limits, set forth in Section 2.07. It is understood and agreed that the obligation of the Company to provide such substitution or to make such repurchase of any affected Mortgage Loan or Mortgage Loans or any property acquired in respect thereof as to which a breach has occurred and is continuing shall constitute the sole remedy respecting such breach available to the Holders of the REMIC I Regular Interests and the Class R- 1 Residual Interest or the Trustee on behalf of the Holders of the REMIC I Regular Interests and the Class R-1 Residual Interest. 55. WaMus Repurchase Obligation is also set forth in Section 2.03(a) of the PSA for the LB0602 Trust, in pertinent part, as follows: Upon discovery or receipt of notice of any materially defective document in, or that a document is missing from, the Mortgage File or of the breach by the Seller of any representation, warranty or covenant under the Mortgage Loan Purchase Case 1:09-cv-01656-RMC Document 32 Filed 09/08/10 Page 20 of 44
21 Agreement in respect of any Mortgage Loan which materially and adversely affects the value of such Mortgage Loan or the interest therein of the Certificateholders (it being understood that (i) in the case of any such representation or warranty made to the knowledge or the best of knowledge of the Seller, as to which the Seller has no knowledge, without regard to the Sellers lack of knowledge with respect to the substance of such representation or warranty being inaccurate at the time it was made or (ii) with respect to the representation and warranty set forth in the last sentence of Section 6(xxxix), Section 6(xlvi), the first sentence of Section 6(xlvii), Section 6(lxi) and Section 6(lxiv) of the Mortgage Loan Purchase Agreement, a breach of any such representation or warranty shall in and of itself be deemed to materially and adversely affect the interest of the Certificateholders in the related Mortgage Loan), the Trustee shall promptly notify the Depositor, the Seller, the NIMS Insurer and the Master Servicer of such defect, missing document or breach and request that the Seller deliver such missing document or cure such defect or breach within 90 days from the date the Seller was notified of such missing document, defect or breach (except as described in Section 2.03(e)), and if the Seller does not deliver such missing document or cure such defect or breach in all material respects during such period, the Master Servicer (or, in accordance with Section 3.02(b), the Trustee) shall enforce the obligations of the Seller under the Mortgage Loan Purchase Agreement to repurchase such Mortgage Loan from REMIC 1 at the Purchase Price within 90 days after the date on which the Seller was notified (subject to Section 2.03(e)) of such missing document, defect or breach, if and to Case 1:09-cv-01656-RMC Document 32 Filed 09/08/10 Page 21 of 44
22 the extent that the Seller is obligated to do so under the Mortgage Loan Purchase Agreement. 56. The Trusts remedies for breaches of the Representations and Warranties, including, but not limited to, the Repurchase Obligations, are especially important because many of the mortgage loans sold to, and deposited in, the Trusts are subprime and were made to borrowers who represent higher credit risks than traditional borrowers. Thus, seemingly small differences in a borrowers qualifications, the terms of the mortgage loan, the quality and value of mortgage loan collateral, or the integrity of the mortgage loan-origination process could materially and adversely affect the value of the mortgage loans in the Trusts or the interests of the Trusts therein. 57. Attached hereto as Exhibit 7 is a chart indicating the contractual provisions in the Governing Documents for each Primary Trust setting forth WaMus Repurchase Obligations with respect to each Primary Trust. (5) The Trustees Access and Indemnification Rights 58. Under the Governing Documents for each Primary Trust, WaMu, as Servicer, is obligated to provide the Trustee and other parties with access to all records maintained by WaMu in respect of WaMus rights and obligations under the Governing Documents, including information about the mortgage loans and the mortgage loan files, and access to officers of WaMu responsible for such obligations (the Access Rights). 59. By way of example, the Access Rights are set forth in Section 6.05 of the PSA for the LB0602 Trust, in pertinent part, as follows: The Master Servicer shall afford (and any Sub-Servicing Agreement shall provide that each Sub-Servicer shall afford) the Depositor, the NIMS Insurer and the Case 1:09-cv-01656-RMC Document 32 Filed 09/08/10 Page 22 of 44
23 Trustee, upon reasonable notice, during normal business hours, access to all records maintained by the Master Servicer (and any such Sub-Servicer) in respect of the Master Servicers rights and obligations hereunder and access to officers of the Master Servicer (and those of any such Sub-Servicer) responsible for such obligations. 60. WaMu, in its various capacities, is also obligated under the Governing Documents for each Primary Trust to indemnify the Trustee for any losses or expenses incurred by the Trustee in, among other things, enforcing the rights of the Trusts (the Indemnification Rights). By way of example, the Indemnification Rights are set forth in Section 8.05(b) of the PSA for the LB0602 Trust, in pertinent part, as follows: Without limiting the Master Servicers indemnification obligations under Section 6.03, the Master Servicer agrees to indemnify the Trustee from, and hold it harmless against, any loss, liability or expense resulting from a breach of the Master Servicers obligations and duties under this Agreement. Such indemnity shall survive the termination or discharge of this Agreement and the resignation or removal of the Trustee. Any payment under this Section 8.05(b) made by the Master Servicer to the Trustee shall be from the Master Servicers own funds, without reimbursement from the Trust Fund therefor. 61. Both before and after the date the FDIC was appointed as receiver of WMB, the Trustee and/or Trusts have been subject to claims, including litigation claims, by borrowers and other parties alleging, among other things, violations of federal and state laws relating to the servicing of the mortgage loans in the Trusts. Accordingly, the Indemnification Rights have both matured and continue to accrue with respect to existing and future claims. Case 1:09-cv-01656-RMC Document 32 Filed 09/08/10 Page 23 of 44
24 62. Attached as Exhibit 7 is a chart indicating some of the contractual provisions in the Governing Documents setting forth the Access Rights and the Indemnification Rights with respect to each Primary Trust. (6) WaMus Servicing Obligations 63. The Governing Documents for each Primary Trust further provide that WaMu must service and administer the mortgage loans in the Trusts on behalf of the Trustee, and in the best interests of, and for the benefit of, the Trusts beneficiaries, in a particular manner (the Servicing Obligations). These Servicing Obligations are set forth in the Governing Documents for each Primary Trust. By way of example, these Servicing Obligations are set forth in Section 3.01 of the PSA for the Long Beach Mortgage Loan Trust, Series 2006-4 (Issue ID No. LB0604), in pertinent part, as follows: The Master Servicer shall service and administer the Mortgage Loans on behalf of the Trustee and in the best interests of and for the benefit of the Certificateholders (as determined by the Master Servicer in its reasonable judgment) in accordance with the terms of this Agreement and the respective Mortgage Loans and, to the extent consistent with such terms, in the same manner in which it services and administers similar mortgage loans for its own portfolio, giving due consideration to customary and usual standards of practice of mortgage lenders and loan servicers administering similar mortgage loans in the local areas where the related Mortgaged Property is located but without regard to: (i) any relationship that the Master Servicer, any Sub-Servicer or any Affiliate of the Master Servicer or any Sub-Servicer may have with the related Mortgagor; (ii) the ownership or non- ownership of any Certificate by the Master Servicer or any Affiliate of the Master Case 1:09-cv-01656-RMC Document 32 Filed 09/08/10 Page 24 of 44
25 Servicer; (iii) the Master Servicers obligation to make Advances or Servicing Advances; or (iv) the Master Servicers or any Sub-Servicers right to receive compensation for its services hereunder or with respect to any particular transaction. 64. Under many of the PSAs for the Primary Trusts, the Servicer is obligated to enforce the Repurchase Obligations on behalf of the Trust to the extent that it is not the Seller. See, e.g., 2.03(a), 3.02(b) of the PSA for the LB0602 Trust. C. WaMu Breached the Representations and Warranties 65. In April 2010, the United States Senate Subcommittee on Investigations (the Senate Subcommittee) held hearings about WaMus origination and securitization of mortgage loans. Based on the Senate Subcommittees findings, as well as the reports of other governmental agencies, the Trustee has reason to believe that many of the mortgage loans in the Trusts do not comply with the Representations and Warranties and that WaMu breached the Representations and Warranties, which breaches had a material and adverse effect on the value of the loans or the interests of the Trusts therein. 66. Because WaMu has denied the Trustee access to records maintained by WaMu, as Servicer, and has repeatedly refused to honor the Trustees contractual Access Rights, the Trustee is unable to specifically identify particular mortgage loans with respect to which there have been such breaches of particular Representations and Warranties. Notwithstanding, there is a reasonable basis to conclude that many of the mortgage loans included in the Trusts do not comply with the Representations and Warranties, and that WaMu breached the Representations and Warranties, which breaches had a material and adverse effect on the value of the loans or the interests of the Trusts therein. Case 1:09-cv-01656-RMC Document 32 Filed 09/08/10 Page 25 of 44
26 67. The Senate Subcommittee investigation covered both WaMus Wholesale Specialty Lending division (Specialty Lending) and WaMus Mutual Mortgage Securities division (Mutual Mortgage). The Senate Subcommittee found that between 2000 and 2007, WaMus Specialty Lending, i.e., subprime lending, sponsored 46 securitizations with a total original collateral balance of approximately $77 billion. These securitizations were primarily by WaMus Long Beach Mortgage Company (Long Beach) affiliate. The Primary Trusts include 43 of the 46 subprime securitizations referenced in the Senate Committee report, with a total original collateral balance of approximately $73 billion or over 95 percent of all of WaMus subprime securitizations during the time period. Wall Street and the Financial Crisis: Hearing before the Permanent Subcomm. On Investigations, April 13, 2010, (Subcommittee Hearing), Hearing Ex. #45. See Exhibit 1-A (Trusts 1-43). 68. The remaining Primary Trusts, with a total original collateral balance of approximately $92 billion, account for nearly half of the securitizations of WaMus Mutual Mortgage division between 2000 and 2007 that were analyzed by the Senate Subcommittee. Id., Hearing Ex. #46. 69. The Senate Subcommittee found that WaMu selected and securitized loans that it had identified as likely to go delinquent, without disclosing its analysis to investors who bought the securities. The Senate Subcommittee also found that WaMu securitized loans tainted by fraudulent information, without notifying purchasers of the fraud that was discovered. Id., Hearing Ex. #1a, at p. 6 (emphasis added). 70. The Senate Subcommittee report, associated hearings, and documents released related to those hearings (collectively, the Senate Record) provide multiple examples of WaMus breaches of Representations and Warranties. For example, the Senate Record indicates Case 1:09-cv-01656-RMC Document 32 Filed 09/08/10 Page 26 of 44
27 that WaMu lacked effective internal controls, used shoddy lending practices, performed inadequate underwriting, failed to follow procedures, and committed critical errors. These practices by WaMu breached the Governing Documents, including, but not limited to, Sections 6(vi), (ix), (xvii), (xxii), (xxxii), (xxxvii), (xlviii), and (lviii) of the MLPA, which, in turn, triggered WaMus Repurchase and Notice Obligations with respect to the mortgage loans in the Trusts. See, e.g., Exhibits 6, 7. (1) The Senate Subcommittee Findings 71. In addition to the extensive evidence that WaMus securitized loans breached the Representations and Warranties, the Senate Subcommittee also found evidence that WaMu discovered and/or had notice of these breaches, which, in turn, triggered its Repurchase and Notice Obligations, and that WaMu failed to notify RMBS investors and others who purchased the loans of these breaches. See Subcommittee Hearing, Hearing Ex. #1a, at p. 6; 69 supra. 72. The Senate Subcommittee made the following findings of fact related to Washington Mutual Bank, and its parent holding company, Washington Mutual Inc. a. Shoddy Lending Practices. WaMu and its affiliate Long Beach Mortgage Company (Long Beach), used shoddy lending practices riddled with credit, compliance, and operation deficiencies to make tens of thousands of high risk home loans that too often contained excessive risk, fraudulent information, or errors. b. Securitizing Delinquency-Prone and Fraudulent Loans. At times, WaMu selected and securitized loans that it had identified as likely to go delinquent, without disclosing its analysis to investors who bought the securities, and also Case 1:09-cv-01656-RMC Document 32 Filed 09/08/10 Page 27 of 44
28 securitized loans tainted by fraudulent information, without notifying purchasers of the fraud that was discovered. Id. 73. These practices by WaMu breached the Governing Documents, including, but not limited to, Sections 6(xxii), (xxxii), (xxxvii), (xlviii), and (lviii) of the MLPA, which, in turn, triggered WaMus Repurchase and Notice Obligations with respect to the mortgage loans in the Trusts. See, e.g., Exhibits 6, 7. 74. Based upon: (a) the pervasiveness of such practices by WaMu, as found by the Senate Subcommittee; and (b) the high proportion of WaMus securitized mortgage loans that were sold to, or deposited in, the Trusts during the relevant time period, the Trustee has reason to believe that such practices affected mortgage loans sold to, or deposited in, the Trusts by WaMu and that, accordingly, many of the mortgage loans in the Trusts do not comply with the Representations and Warranties. Thus, WaMu breached the Representations and Warranties, which breaches had a material and adverse effect on the value of the mortgage loans in the Trusts or the interests of the Trusts therein, which, in turn, triggered WaMus Repurchase and Notice Obligations with respect to the mortgage loans in the Trusts. 75. The extent of such practices by WaMu and WaMus discovery and/or notice of the breaches of the Representations and Warranties is further evidenced by the following excerpt from the Senate Subcommittees report: Over the years, both Long Beach and Washington Mutual were the subject of repeated criticisms by the banks internal auditors and reviewers, as well as its regulators, OTS and the FDIC, for deficient lending and securitization practices. Long Beach loans repeatedly suffered from early payment defaults, poor underwriting, fraud, and high delinquency rates. Its mortgage backed securities Case 1:09-cv-01656-RMC Document 32 Filed 09/08/10 Page 28 of 44
29 were among the worst performing in the marketplace. In 2003, for example, Washington Mutual stopped Long Beachs securitizations and sent a legal team for three months to address problems and ensure its securitizations and whole loan sales were meeting the representations and warranties in Long Beachs sales agreements. In 2005, Long Beach had to repurchase over $875 million of nonperforming loans from investors, suffered a $107 million loss, and had to increase its repurchase reserve by nearly $75 million. As a result, Long Beachs senior management was removed, and Long Beachs subprime lending operations were made subject to oversight by Washington Mutuals Home Loans Division. Despite those changes, early payment defaults and delinquencies surged again in 2006, and several 2007 reviews identified multiple lending, credit, and appraisal problems. By mid-2007, Washington Mutual shut down Long Beach as a separate entity and took over its subprime lending operations. At the end of the year, a Long Beach employee was indicted for having taken kickbacks to process fraudulent or substandard loans. In addition to problems with its subprime lending, Washington Mutual suffered from lending and securitization deficiencies related to its own mortgage activities. It received, for example, repeated criticisms for unsatisfactory underwriting procedures, loans that did not meet credit requirements, and loans subject to fraud, appraisal problems, and errors. For example, a 2005 internal investigation found that loans originated from two top loan producing offices in southern California contained an extensive level of fraud caused primarily by Case 1:09-cv-01656-RMC Document 32 Filed 09/08/10 Page 29 of 44
30 employees circumventing bank policies. Despite fraud rates in excess of 58% and 83% at those two offices, no steps were taken to address the problems, and no investors who purchased loans originated by those offices were notified in 2005 of the fraud problem. In 2006, securitizations with elevated delinquency rates were found to contain lower quality loans that did not meet the banks credit standards. In 2007, fraud problems resurfaced at the southern California offices, and another internal review of one of the offices found a fraud rate of 62%. In 2008, the bank uncovered evidence that employees at still another top producing loan office were manufacturing false documentation to support loan applications. A September 2008 internal review found that loans marked as containing fraudulent information had nevertheless been securitized and sold to investors, identifying ineffective controls that had existed for some time. Subcommittee Hearing, Hearing Ex. #1a, at p. 4. (2) The Senate Record 76. The Senate Record, which is replete with internal WaMu documents, indicates that WaMu lacked effective internal controls, used shoddy lending practices, performed inadequate underwriting, failed to follow procedures, and committed critical errors in its mortgage origination and securitization. These practices by WaMu breached the Governing Documents, which, in turn, triggered WaMus Repurchase and Notice Obligations. 77. By way of example, the following excerpts from the Senate Record evidence WaMus breaches of the Governing Documents, including but not limited to, Sections 6(xxii), (xxxii), and (lviii) of the MLPAs (see Exhibit 6): Case 1:09-cv-01656-RMC Document 32 Filed 09/08/10 Page 30 of 44
31 a. In its examinations from 2004 to 2008, the OTS noted that WaMu did not have effective controls in place to ensure proper risk management. Risk management was especially important in the case of WaMu because of its high-risk lending strategy, significant and frequent management changes, corporate reorganizations, and significant growth. Further, when OTS pointed out weaknesses in WaMus internal controls, WaMu management did not always take action to resolve those weaknesses. Offices of Inspector General, Department of the Treasury and Federal Deposit Insurance Corporation, Evaluation of Federal Regulatory Oversight of Washington Mutual Bank, Report No. EVAL-10-002, April 2010 (the Evaluation Report), at p. 12. b. A WaMu audit of Long Beach found that the overall system of risk management and internal controls has deficiencies related to multiple critical origination and underwriting processes, and that [t]hese deficiencies require immediate effective corrective action to limit continued exposure to losses. Subcommittee Hearing, Hearing Ex. #1d. c. An April 17, 2006 WaMu audit of Long Beach found that [r]elaxed credit guidelines, breakdowns in manual underwriting processes, and inexperienced subprime personnel . . . coupled with a push to increase loan volume and the lack of an automated fraud monitoring tool, exacerbated the deterioration in loan quality. Id. d. A September 21, 2005 WaMu audit of Long Beach found that [i]n 24 of 27 (88%) of the refinance transactions reviewed, policies established to preclude Case 1:09-cv-01656-RMC Document 32 Filed 09/08/10 Page 31 of 44
32 origination of loans providing no net tangible benefit to the borrower were not followed. Id. e. An email from the Senior Credit Risk Officer of Corporate Credit Review in December 2006 noted the findings from a monthly test of 275 loans, 15 days after closing: Appraisal deficiencies . . . . Material misrepresentations . . . . Legal documents were missing or contained errors or discrepancies . . . . Credit evaluation or loan decision errors . . . . The email added that deterioration was accelerating in recent vintages with each vintage since 2002 having performed worse than the prior vintage. The email prompted the Executive Vice President and Chief Enterprise Risk Officer to write that Long Beach represents a real problem for WaMu, and express concern that Credit Review may seem to have been standing on the sidelines while problems continue. Id., Hearing Ex. #16. f. A credit review report disclosed that [Long Beach]s credit management and portfolio oversight practices were unsatisfactory. . . . Approximately 4,000 of the 13,000 loans in the warehouse had been reviewed and of these, approximately 950 were deemed saleable, 800 were deemed unsaleable, and the remainder contained deficiencies requiring remediation prior to sale. Furthermore, [o]f 4,500 securitized loans eligible for foreclosure, 10% could not be foreclosed due to documentation issues. Id., Hearing Ex. #8b. g. An OTS examiner tried to object to so-called NINA loans meaning loans in which No Income and No Asset numbers are required to be provided by the borrower. An OTS policy official agreed, writing in a 2007 email that NINA loans are collateral dependent lending and deemed unsafe and unsound by all the Case 1:09-cv-01656-RMC Document 32 Filed 09/08/10 Page 32 of 44
33 agencies. Opening Statement of Senator Carl Levin Before the U.S. Senate Permanent Subcommittee on Investigations, Wall Street and the Financial Crisis: The Role of Bank Regulators, April 16, 2010 (Levin Statement). h. Another example of WaMus breaches of the Representations and Warranties involves WaMus flagship product, the Option Adjustable Rate Mortgage: WaMu engaged in a host of shoddy lending practices that vastly increased the risks associated with its Option ARMs, such as permitting virtually every Option ARM borrower to make minimum payments which resulted in negatively amortizing loans in which the loan principal actually increased over time. Washington Mutual relied on rising house prices and refinancing to avoid payment shock and loan defaults. Id. i. In addition, WaMu and Long Beach too often steered borrowers into home loans they could not afford, allowing and encouraging them to make low initial payments that would be followed by much higher payments, and presumed that rising home prices would enable those borrowers to refinance their loans or sell their homes before the payments shot up. Subcommittee Hearing, Hearing Ex. #1a, at p. 6. j. Moreover, loan officers and processors were paid based on volume, not the quality of their loans, and were paid more for issuing higher risk loans. Loan officers and mortgage brokers were also paid more when they got borrowers to pay higher interest rates, even if the borrower qualified for a lower rate a practice that enriched WaMu in the short-term, but made defaults more likely down the road. See id., at pp. 4-5. Case 1:09-cv-01656-RMC Document 32 Filed 09/08/10 Page 33 of 44
34 k. (High) Repeat Issue Underwriting guidelines established to mitigate the risk of unsound underwriting decisions are not always followed and decisioning methodology is not always fully documented. Id., Hearing Ex. #19, at p. 3. l. A November 1, 2005 internal WaMu Long Beach Post Mortem also found that [u]nderwriting guidelines are not consistently followed and conditions are not consistently or effectively met. LBMC Post Mortem Early Findings Read Out, November 1, 2005, at p. 1. That same report found that only 1% of first payment defaults were unavoidable, and that 60% of first payment defaults could have been prevented had current policy, procedures and guidelines been better executed. Id., at p. 2. 78. The Senate Record also evidences that WaMu did not follow standard residential appraisal methods, and breached the Representations and Warranties, including, but not limited to, Section 6(xxxiii) of the MLPAs (see Exhibit 6): WaMus review of appraisals establishing the value of single family homes did not always follow standard residential appraisal methods because WaMu allowed a homeowners estimate of the value of the home to be included on the form sent from WaMu to third-party appraisers, thereby biasing the appraisers evaluation. Evaluation Report, at p.11. 79. WaMus shoddy lending practices and its securitization of loans that were likely to go delinquent greatly increased the risks associated with those loans. As Steve Rotella, WaMus former president and chief operating officer, wrote to Kerry Killinger, WaMus former chairman and chief executive officer: Here are the facts: the portfolio (total serviced) is up 46% YOY through March but our delinquncies [sic] are up 140% and foreclosures close to Case 1:09-cv-01656-RMC Document 32 Filed 09/08/10 Page 34 of 44
35 70%. Mr. Rotella summarized by telling his boss [i]t is ugly. Subcommittee Hearing, Hearing Ex. #11. 80. Moreover, after September 25, 2008, the Trusts have experienced a substantial increase in delinquencies giving rise to foreclosures or other remedial activity by WaMu as Servicer, as well as an increase in realized losses to the Trusts. D. WaMus Breaches of the Governing Documents 81. Based on, among other things, the Senate Subcommittee findings and the Senate Record, and given that the Primary Trusts constitute a significant percentage of the total number of securitizations by WaMu during the relevant time period, the Trustee has reason to believe that: (i) WaMu breached the Representations and Warranties, which breaches had a material and adverse effect on the value of the mortgage loans in the Trusts or the interests of the Trusts therein; (ii) WaMu discovered and/or had notice of those breaches, which triggered WaMus Notice and Repurchase Obligations; (iii) WaMu breached its Repurchase and Notice Obligations by failing to cure the breach of the Representations and Warranties in all material respects, repurchase the mortgage loans at a specified repurchase price, or substitute for the affected mortgage loans upon discovery or receipt of notice of those breaches; and (iv) WaMu breached and continues to breach its obligations in respect of the Trustees Access Rights. However, because WaMu has denied the Trustee access to the loan-level books and records, and information concerning the mortgage loans in the Trusts, the Trustee is unable to specifically identify particular mortgage loans in the Trusts that breached particular Representations and Warranties or for which the Notice and/or Repurchase Obligations have been triggered and breached. Case 1:09-cv-01656-RMC Document 32 Filed 09/08/10 Page 35 of 44
36 82. To date, WaMu has not provided the Trustee with notice of any breaches of Representations and Warranties giving rise to Repurchase Obligations, except with respect to certain mortgage loans repurchased from certain Trusts soon after the Trusts were formed. In addition, the Trustee has been denied access to WaMus records and other information concerning the mortgage loans in the Trusts, and WaMu has failed to grant the Trustee such access on the stated basis, among others, that the Access Rights have not been triggered because the Trustee and investors have presented no evidence that WaMu has breached its obligations (including the Notice Obligations). Indeed, despite numerous requests to WaMu including, most recently on June 7, 2010, June 9, 2010, June 11, 2010, and August 16, 2010 the Trustee has not been afforded its contractually required access to WaMus records and other information concerning the mortgage loans in the Trusts. 83. WaMu has thus created a Catch 22 situation, asserting that the Trustee cannot seek to enforce Repurchase Obligations because it lacks evidence that WaMu breached Representations and Warranties with respect to specific mortgage loans, and also cannot exercise Access Rights to acquire such evidence of a breach because, according to WaMu, such exercise is not reasonable without evidence of a breach. 84. In sum: (i) WaMu breached the Representations and Warranties, which breaches had a material and adverse effect on the value of the mortgage loans in the Trusts or the interests of the Trusts therein; (ii) WaMu discovered and/or had notice of those breaches, which triggered WaMus Notice and Repurchase Obligations; (iii) WaMu breached its Notice and Repurchase Obligations; and (iv) WaMu breached and continues to breach its obligations in respect of the Trustees Access Rights. Case 1:09-cv-01656-RMC Document 32 Filed 09/08/10 Page 36 of 44
37 85. As a direct and proximate result of the breaches of contract set forth in this Complaint, the Primary Trusts have incurred losses estimated by the Trustee, based on the limited information available to it, to range from approximately $6 billion to $10 billion, with such losses continuing to accrue. In addition, as a direct and proximate result of the breaches of contract set forth in this Complaint, the Secondary Trusts have also been damaged because their performance is dependent, in whole or in part, on the performance of the Primary Trusts. E. The FDICs and JPMCs Contentions Regarding Successor Liability 86. Upon the FDICs appointment as receiver for WMB, on September 25, 2008, the FDIC as receiver for WMB, the FDIC in its corporate capacity, and JPMC entered into the PAA. The PAA is incorporated by reference and attached hereto as Exhibit 2. Section 2.1 of the PAA provides: Subject to Sections 2.5 and 4.8, the Assuming Bank expressly assumes at Book Value (subject to adjustment pursuant to Article VII) and agrees to pay, perform, and discharge, all of the liabilities of the Failed Bank which are reflected on the Books and Records of the Failed Ban as of Ban Closing, including the Assumed Deposits and all liabilities associated with any and all employee benefit plans, except as listed on the attached Schedule 2.1, and as otherwise provided in this Agreement (such liabilities referred to as Liabilities Assumed). Notwithstanding Section 4.8, the Assuming Bank specifically assumes all mortgage servicing rights and obligations of the Failed Bank. 87. Section 3.1 of the PAA provides that JPMC purchased all mortgage servicing rights and obligations of WaMu; and Schedule 2.1 of the PAA sets forth Certain Liabilities Not Assumed by JPMC. The list of liabilities not assumed by JMPC pursuant to the PAA does Case 1:09-cv-01656-RMC Document 32 Filed 09/08/10 Page 37 of 44
38 not include or reference any liabilities or obligations arising under the Governing Documents, including, without limitation, WaMus obligations as Seller, Depositor, and/or Servicer. 88. The FDIC contends that it transferred to JPMC all of the obligations and liabilities relating to the Trusts at issue in this action. In its motion to dismiss (pp. 18-19), the FDIC states: Under the unambiguous terms of the [PAA], as well as FIRREA, all risk of liability to DBNTC or the Trusts is borne by JPMC, not FDIC Receiver. 89. More specifically, the FDIC contends in its motion to dismiss (p. 19) that: As the structure of the [PAA] makes clear, WaMus Trust-related seller and servicer obligations are among the liabilities that FDIC Receiver transferred to JPMC and that JPMC expressly agreed to assume. See [PAA] 2.1. 90. JPMC contends that JPMC acquired only liabilities reflected on the Books and Records of the Failed Bank as of Bank Closing and only if and to the extent they had a Book Value. Letter from Stacey R. Friedman to Robin A. Henry dated August 25, 2010, at p. 1. 91. JPMC further contends that [a]ll other liabilities of Washington Mutual Bank, including the DBNTC liabilities, remain with the Federal Deposit Insurance Corporation as receiver for the failed bank. Id. (emphasis added). CLAIMS FOR RELIEF Count I Breach of Contract
92. The Trustee incorporates by reference all prior paragraphs as if they were fully set forth herein. 93. WaMu breached the Representations and Warranties, which breaches had a material and adverse effect on the value of the mortgage loans in the Trusts or the interests of the Trusts therein. WaMu discovered and/or had notice of these breaches, which triggered WaMus Case 1:09-cv-01656-RMC Document 32 Filed 09/08/10 Page 38 of 44
39 Notice and Repurchase Obligations. WaMu breached its Repurchase and Notice Obligations by failing to cure the breaches of the Representations and Warranties in all material respects, repurchase the mortgage loans at a specified repurchase price, or substitute for the affected mortgage loans upon discovery or receipt of notice of these breaches. 94. One or both of the FDIC and/or JPMC, as WaMus successor-in-interest and/or successors-in-interest, is liable for WaMus breaches of the Governing Documents. 95. Defendants, in their capacity or capacities as successor Servicer for WaMu, discovered and/or had notice of WaMus breaches of the Representations and Warranties and so are liable to the Trusts for breach of the Notice Obligation and any resulting damages. 96. Having assumed and not repudiated the Governing Documents for the Trusts, the FDIC, as receiver for WMB, is liable for WaMus breaches of the Governing Documents. 97. The Trusts and the Trustees claims against the FDIC for breaches of these assumed contracts are entitled at least to administrative expense priority in the WMB receivership estate. 98. WaMu also continues to breach its obligations in respect of the Trustees Access Rights by failing to provide the Trustee, and others, with access to the records and other information concerning the mortgage loans in the Trusts so that they could determine whether Repurchase Obligations exist with respect to particular mortgage loans in the Trusts. 99. These breaches have made it impossible for the Trustee or other parties-in-interest to the Trusts to enforce WaMus Repurchase Obligations, including the enforcement mechanism of providing WaMu with notice of a breach with respect to, and demanding cure, substitution or repurchase of, specific mortgage loans included in the Trusts. Case 1:09-cv-01656-RMC Document 32 Filed 09/08/10 Page 39 of 44
40 100. The Trustee has performed all of its obligations under the Governing Documents for the Trusts by performing services both before and after the appointment of the FDIC as receiver for WMB, and has not breached any such obligations or excused the performance by WaMu of any of its obligations under the Governing Documents. 101. As a direct and proximate cause of these breaches of contract, the Trusts have suffered and continue to suffer significant damages. Count II Declaratory Judgment 102. The Trustee incorporates by reference all prior paragraphs as if they were fully set forth herein. 103. The FDIC contends that under the PAA, as well as FIRREA, JPMC assumed from the FDIC, as receiver, all of WaMus liabilities and obligations as seller, servicer, sponsor or in any other capacity under the Governing [Documents]. 104. JPMC contends that under the PAA it did not assume WaMus liabilities or obligations to the Trusts and the Trustee under the Governing Documents. 105. A justiciable controversy exists as to the rights and obligations of the FDIC and JPMC regarding whether, and to what extent, the FDIC and/or JPMC has successor liability for WaMus breaches of the Governing Documents, as well as for WaMus ongoing obligations to the Trusts and the Trustee under the Governing Documents, including, but not limited to, the Repurchase Obligations, the Notice Obligations, the Access Rights and the Indemnification Rights. 106. The Trustee seeks a declaratory judgment declaring: (i) which, or in the alternative, that both of, WaMus two potential successors-in-interest the FDIC or JPMC succeed(s) to WaMus liabilities for breaches of Governing Documents and WaMus ongoing Case 1:09-cv-01656-RMC Document 32 Filed 09/08/10 Page 40 of 44
41 obligations to the Trusts and the Trustee under the Governing Documents, including, but not limited to, the Repurchase Obligations, the Notice Obligations, the Access Rights and the Indemnification Rights, and (ii) the extent to which each of the FDIC or JMPC have assumed those liabilities and ongoing obligations. WHEREFORE, the Trusts and the Trustee request the following relief from this Court: A. A judgment in their favor against JPMC, in an amount to be determined, plus pre-and post-judgment interest, costs of suit, and attorneys fees; and/or B. in the alternative, against the FDIC, in an amount to be determined, plus pre-and post-judgment interest, costs of suit, and attorneys fees; C. a declaratory judgment declaring: (i) which, or in the alternative, that both of, WaMus two potential successors-in-interest the FDIC or JPMC succeed(s) to WaMus liabilities for breaches of Governing Documents and WaMus ongoing obligations to the Trusts and the Trustee under the Governing Documents, including, but not limited to, the Repurchase Obligations, the Notice Obligations, the Access Rights and the Indemnification Rights, and (ii) the extent to which each of the FDIC or JMPC have assumed those liabilities and ongoing obligations; D. costs, expenses and attorneys fees incurred by the Trustee in connection with this action; and E. such other and further relief as the Court may deem just.
Case 1:09-cv-01656-RMC Document 32 Filed 09/08/10 Page 41 of 44
42
JURY TRIAL DEMAND The Trustee hereby demands a jury trial to the fullest extent allowed by law. Dated: September 8, 2010 Armonk, NY Respectfully submitted,
BOIES, SCHILLER & FLEXNER LLP
By: /s/ Robin A. Henry Robin A. Henry (admitted pro hac vice) Michael Endler (admitted pro hac vice) Motty Shulman (admitted pro hac vice) 333 Main Street Armonk, NY 10504 Phone: (914) 749-8200 Fax: (914) 749-8300
Tanya S. Chutkan (D.C. Bar No. 420478) BOIES, SCHILLER & FLEXNER LLP 5301 Wisconsin Ave. NW #800 Washington, DC 20015 Phone: (202) 237-2727 Fax: (202) 237-6131
Counsel for Plaintiff Deutsche Bank National Trust Company, as Trustee for the Trusts listed in Exhibits 1-A and 1-B, for all claims except with respect to paragraph 97 of the Complaint.
- and -
TALCOTT FRANKLIN P.C.
Talcott J. Franklin (D.D.C. Bar No. TX0078) 208 North Market Street, Suite 200 Dallas, Texas 75202 Phone: (214) 736-8730 Fax: (877) 577-1356
Counsel for Plaintiff Deutsche Bank National Trust Company, as Trustee for the Trusts listed in Exhibits 1-A and 1-B. Case 1:09-cv-01656-RMC Document 32 Filed 09/08/10 Page 42 of 44
43 Certificate of Service This is to certify that on September 8, 2010 the foregoing Amended Complaint was filed electronically with the Clerk of the Court via email and served upon all appearing parties and Counsel of record via email and Federal Express overnight mail at the below listed addresses.
By: /s/ Sara Clinton
Scott H. Christensen HUGHES HUBBARD & REED, LLP 1775 I Street, NW Suite 600 Washington, DC 20006 (202) 721-4644 Fax: (202) 721-4646 Email: christen@hugheshubbard.com
William Robert Stein HUGHES HUBBARD & REED LLP 1775 I Street, NW Washington, DC 20006-2402 (202) 721-4600 Fax: (202) 721-4646 Email: stein@hugheshubbard.com
Anne M. Devens FEDERAL DEPOSIT INSURANCE CORPORATION 3501 Fairfax Drive Room VS-D-7062 Arlington, VA 22207 (703) 562-2204 Email: adevens@fdic.gov
Jason Samuel Cohen HUGHES HUBBARD & REED, LLP 1775 I Street, NW Washington, DC 20006 (202) 721-4788 Email: cohenj@hugheshubbard.com Case 1:09-cv-01656-RMC Document 32 Filed 09/08/10 Page 43 of 44
44
Jeffrey D. Wexler LUCE, FORWARD, HAMILTON & SCRIPPS, LLP 601 South Figueroa Street Suite 3900 Los Angeles, CA 90017 (213) 892-4910 Fax: (213) 452-8029 Email: jwexler@luce.com
Michael Hain Bierman LUCE, FORWARD, HAMILTON & SCRIPPS LLP 601 South Figueroa Street Suite 3900 Los Angeles, CA 90017 (213) 892-4992 Fax: (213) 452-8032 Email: mbierman@luce.com
Case 1:09-cv-01656-RMC Document 32 Filed 09/08/10 Page 44 of 44
EXHIBIT 1A Case 1:09-cv-01656-RMC Document 32-1 Filed 09/08/10 Page 1 of 52 ID No. Transaction Series DBNTC Role(s) WaMu Role(s) MLPA Date PSA Date 1 LB00F1 Long Beach Home Equity Loan Trust 2000-LB1 Trustee Depositor, Master Servicer, Seller 8/1/00 8/1/00 2 LB0002 Long Beach Mortgage Loan Trust 2000-1 Trustee Depositor, Master Servicer, Seller 12/12/00 12/1/00 3 LB0101 Long Beach Mortgage Loan Trust 2001-1 Trustee Depositor, Master Servicer, Seller 3/14/01 3/1/01 4 LB0102 Long Beach Mortgage Loan Trust 2001-2 Trustee Depositor, Master Servicer, Seller 7/18/01 7/1/01 5 LB0103 Long Beach Mortgage Loan Trust 2001-3 Trustee Depositor, Master Servicer, Seller 9/19/01 9/1/01 6 LB0104 Long Beach Mortgage Loan Trust 2001-4 Trustee Depositor, Master Servicer, Seller 11/30/01 12/1/01 7 LB0201 Long Beach Mortgage Loan Trust 2002-1 Trustee Depositor, Master Servicer, Seller 4/1/02 4/1/02 8 LB0202 Long Beach Mortgage Loan Trust 2002-2 Trustee, Administrator Depositor, Master Servicer, Seller 5/30/02 6/1/02 9 LB0205 Long Beach Mortgage Loan Trust 2002-5 Trustee, Custodian Depositor, Master Servicer, Seller 10/31/02 11/1/02 10 LB0301 Long Beach Mortgage Loan Trust 2003-1 Trustee, Custodian Depositor, Master Servicer, Seller 1/30/03 2/1/03 11 LB0302 Long Beach Mortgage Loan Trust 2003-2 Trustee, Custodian Depositor, Master Servicer, Seller 4/2/03 4/1/03 12 LB0303 Long Beach Mortgage Loan Trust 2003-3 Trustee, Custodian Depositor, Master Servicer, Seller 5/29/03 6/1/03 13 LB0304 Long Beach Mortgage Loan Trust 2003-4 Trustee, Custodian Depositor, Master Servicer, Seller 7/8/03 7/.1/03 14 LB0401 Long Beach Mortgage Loan Trust 2004-1 Trustee, Custodian Depositor, Master Servicer, Seller 2/3/04 2/1/04 15 LB0402 Long Beach Mortgage Loan Trust 2004-2 Trustee, Custodian Depositor, Master Servicer, Seller 5/1/04 5/1/04 16 LB0403 Long Beach Mortgage Loan Trust 2004-3 Trustee, Custodian Depositor, Master Servicer, Seller 6/2/04 6/1/04 17 LB0404 Long Beach Mortgage Loan Trust 2004-4 Trustee, Custodian Depositor, Master Servicer, Seller 9/2/04 9/1/04 18 LB0405 Long Beach Mortgage Loan Trust 2004-5 Trustee, Custodian Depositor, Master Servicer, Seller 8/18/04 8/1/04 19 LB0406 Long Beach Mortgage Loan Trust 2004-6 Trustee, Custodian Depositor, Master Servicer, Seller 10/20/04 10/1/04 20 LB0501 Long Beach Mortgage Loan Trust 2005-1 Trustee, Custodian Depositor, Master Servicer, Seller 1/3/05 1/1/05 21 LB0502 Long Beach Mortgage Loan Trust 2005-2 Trustee, Custodian Depositor, Master Servicer, Seller 3/31/05 4/1/05 22 GS05X2 GSAMP Trust 1 2005-S2 Trustee Master Servicer, Responsible Party 12/1/04 5/1/05 23 LB05W1 Long Beach Mortgage Loan Trust 2005-WL1 Trustee, Custodian Depositor, Master Servicer, Seller 7/13/05 7/1/05 24 LB0503 Long Beach Mortgage Loan Trust 2005-3 Trustee, Custodian Depositor, Master Servicer, Seller 9/1/05 9/1/05 25 LB05W2 Long Beach Mortgage Loan Trust 2005-WL2 Trustee, Custodian Depositor, Master Servicer, Seller 8/25/05 8/1/05 26 LB05W3 Long Beach Mortgage Loan Trust 2005-WL3 Trustee, Custodian Depositor, Master Servicer, Seller 11/25/05 11/1/05 27 GS06L1 GSAMP Trust 1 2006-S1 Trustee, Custodian Servicer 12/1/04 1/1/06 EXHIBIT 1-A PRIMARY TRUSTS Page 1 of 4 Case 1:09-cv-01656-RMC Document 32-1 Filed 09/08/10 Page 2 of 52 ID No. Transaction Series DBNTC Role(s) WaMu Role(s) MLPA Date PSA Date 28 LB06W1 Long Beach Mortgage Loan Trust 2006-WL1 Trustee, Custodian Depositor, Master Servicer, Seller 1/9/06 1/1/06 29 LB06W2 Long Beach Mortgage Loan Trust 2006-WL2 Trustee, Custodian Depositor, Master Servicer, Seller 1/26/06 1/1/06 30 LB06W3 Long Beach Mortgage Loan Trust 2006-WL3 Trustee, Custodian Depositor, Master Servicer, Seller 1/26/06 1/1/06 31 LB0601 Long Beach Mortgage Loan Trust 2006-1 Trustee, Custodian Depositor, Master Servicer, Seller 1/24/06 2/1/06 32 LB0602 Long Beach Mortgage Loan Trust 2006-2 Trustee, Custodian Depositor, Master Servicer, Seller 2/24/06 3/1/06 33 LB0603 Long Beach Mortgage Loan Trust 2006-3 Trustee, Custodian Depositor, Master Servicer, Seller 3/30/06 4/1/06 34 LB0604 Long Beach Mortgage Loan Trust 2006-4 Trustee Depositor, Master Servicer, Seller 4/28/06 5/1/06 35 LB060A Long Beach Mortgage Loan Trust 2006-A Trustee, Custodian Depositor, Master Servicer, Seller 4/26/06 5/1/06 36 LB0605 Long Beach Mortgage Loan Trust 2006-5 Trustee, Custodian Depositor, Master Servicer, Seller 6/7/06 6/1/06 37 LB0606 Long Beach Mortgage Loan Trust 2006-6 Trustee, Custodian Depositor, Master Servicer, Seller 7/21/06 7/1/06 38 LB0607 Long Beach Mortgage Loan Trust 2006-7 Trustee, Custodian Depositor, Master Servicer, Seller 8/24/06 8/1/06 39 LB0608 Long Beach Mortgage Loan Trust 2006-8 Trustee, Custodian Depositor, Master Servicer, Seller 9/14/06 9/1/06 40 LB0609 Long Beach Mortgage Loan Trust 2006-9 Trustee, Custodian Depositor, Master Servicer, Seller 10/5/06 10/1/06 41 LB0610 Long Beach Mortgage Loan Trust 2006-10 Trustee, Custodian Depositor, Master Servicer, Seller 11/2/06 11/1/06 42 LB0611 Long Beach Mortgage Loan Trust 2006-11 Trustee, Custodian Depositor, Master Servicer, Seller 12/8/06 12/1/06 43 WA07H1 WaMu Asset Acceptance Corp. 2007-HE1 Trustee Depositor, Servicer, Seller 1/11/07 1/1/07 44 WA0001 Washington Mutual Mortgage Securities Corp. 2000-1 Trustee Servicer, Mortgage Seller 3/1/00 3/31/00 45 WA0107 Washington Mutual Mortgage Securities Corp. 2001-7 Trustee Servicer, Mortgage Seller 5/24/01 5/1/01 46 WA01A3 Washington Mutual Mortgage Securities Corp. 2001-AR3 Trustee Depositor, Servicer, Seller 11/1/01 47 WA02A2 Washington Mutual Mortgage Securities Corp. 2002-AR2 Trustee Depositor, Servicer, Seller 2/26/02 48 WA02A6 Washington Mutual Mortgage Securities Corp. 2002-AR6 Trustee Depositor, Servicer, Seller 5/1/02 49 WA02A9 Washington Mutual Mortgage Securities Corp. 2002-AR9 Trustee Depositor, Servicer, Seller 7/1/02 50 WA02AC Washington Mutual Mortgage Securities Corp. 2002-AR12 Trustee Depositor, Servicer, Seller 9/1/02 51 WA02AD Washington Mutual Mortgage Securities Corp. 2002-AR13 Trustee Depositor, Servicer, Seller 9/1/02 52 WA02AE Washington Mutual Mortgage Securities Corp. 2002-AR14 Trustee Depositor, Servicer, Seller 10/25/02 53 WA02AF Washington Mutual Mortgage Securities Corp. 2002-AR15 Trustee Depositor, Servicer, Seller 10/1/02 54 WA02AG Washington Mutual Mortgage Securities Corp. 2002-AR16 Trustee Depositor, Servicer, Seller 10/1/02 55 WA02AH Washington Mutual Mortgage Securities Corp. 2002-AR17 Trustee Depositor, Servicer, Seller 10/1/02 56 WA02AI Washington Mutual Mortgage Securities Corp. 2002-AR18 Trustee Depositor, Servicer, Seller 11/1/02 57 WA02AJ Washington Mutual Mortgage Securities Corp. 2002-AR19 Trustee, Auction Administrator Depositor, Servicer, Seller 12/1/02 58 WA03A1 Washington Mutual Mortgage Securities Corp. 2003-AR1 Trustee, Auction Administrator Depositor, Servicer, Seller 1/1/03 Page 2 of 4 Case 1:09-cv-01656-RMC Document 32-1 Filed 09/08/10 Page 3 of 52 ID No. Transaction Series DBNTC Role(s) WaMu Role(s) MLPA Date PSA Date 59 WA03A2 Washington Mutual Mortgage Securities Corp. 2003-AR2 Trustee Depositor, Servicer, Seller 2/1/03 60 WA03A3 Washington Mutual Mortgage Securities Corp. 2003-AR3 Trustee, Auction Administrator Depositor, Servicer, Seller 2/1/03 61 WA03A4 Washington Mutual Mortgage Securities Corp. 2003-AR4 Trustee, Auction Administrator Depositor, Servicer, Seller 3/1/03 62 WA03A5 Washington Mutual Mortgage Securities Corp. 2003-AR5 Trustee, Auction Administrator Depositor, Servicer, Seller 4/1/03 63 WA03A6 Washington Mutual Mortgage Securities Corp. 2003-AR6 Trustee Depositor, Servicer, Seller 5/1/03 64 WA03A7 Washington Mutual Mortgage Securities Corp. 2003-AR7 Trustee, Auction Administrator Depositor, Servicer, Seller 6/1/03 65 WA03A8 Washington Mutual Mortgage Securities Corp. 2003-AR8 Trustee Depositor, Servicer, Seller 7/1/03 66 WA03A9 Washington Mutual Mortgage Securities Corp. 2003-AR9 Trustee, Auction Administrator Depositor, Servicer, Seller 8/1/03 67 WA03AA Washington Mutual Mortgage Securities Corp. 2003-AR10 Trustee, Auction Administrator Depositor, Servicer, Seller 9/1/03 68 WA03AB Washington Mutual Mortgage Securities Corp. 2003-AR11 Trustee, Auction Administrator Depositor, Servicer, Seller 10/1/03 69 WA03AC Washington Mutual Mortgage Securities Corp. 2003-AR12 Trustee, Auction Administrator Depositor, Servicer, Seller 12/1/03 70 WA04A1 Washington Mutual Mortgage Securities Corp. 2004-AR1 Trustee Depositor, Servicer, Seller 2/1/04 71 WA04A2 Washington Mutual Mortgage Securities Corp. 2004-AR2 Trustee Depositor, Servicer, Seller 4/1/04 72 WA04A3 Washington Mutual Mortgage Securities Corp. 2004-AR3 Trustee Depositor, Servicer, Seller 4/1/04 73 WA04A4 Washington Mutual Mortgage Securities Corp. 2004-AR4 Trustee, Auction Administrator Depositor, Servicer, Seller 5/1/04 74 WA04A5 Washington Mutual Mortgage Securities Corp. 2004-AR5 Trustee, Auction Administrator Depositor, Servicer, Seller 5/1/04 75 WA04A6 Washington Mutual Mortgage Securities Corp. 2004-AR6 Trustee Depositor, Servicer, Seller 5/1/04 76 WA04A7 Washington Mutual Mortgage Securities Corp. 2004-AR7 Trustee, Auction Administrator Depositor, Servicer, Seller 5/1/04 77 WA04A8 Washington Mutual Mortgage Securities Corp. 2004-AR8 Trustee Depositor, Servicer, Seller 6/1/04 78 WA04AA Washington Mutual Mortgage Securities Corp. 2004-AR10 Trustee Depositor, Servicer, Seller 7/1/04 79 WA04AC Washington Mutual Mortgage Securities Corp. 2004-AR12 Trustee Depositor, Custodian, Servicer, Seller 10/1/04 80 WA04AD Washington Mutual Mortgage Securities Corp. 2004-AR13 Trustee Depositor, Servicer, Seller 11/1/04 81 WA05A1 Washington Mutual Mortgage Securities Corp. 2005-AR1 Trustee Depositor, Servicer, Seller 1/1/05 82 WA05A2 Washington Mutual Mortgage Securities Corp. 2005-AR2 Trustee Depositor, Servicer, Seller 1/1/05 83 WA05A4 Washington Mutual Mortgage Securities Corp. 2005-AR4 Trustee, Auction Administrator Depositor, Servicer, Seller 3/1/05 84 WA05A6 Washington Mutual Mortgage Securities Corp. 2005-AR6 Trustee Depositor, Servicer, Seller 4/1/05 85 WA05A8 Washington Mutual Mortgage Securities Corp. 2005-AR8 Trustee Depositor, Servicer, Seller 7/1/05 86 WA05A9 Washington Mutual Mortgage Securities Corp. 2005-AR9 Trustee Depositor, Servicer, Seller 7/1/05 87 WA05AA Washington Mutual Mortgage Securities Corp. 2005-AR10 Trustee Depositor, Servicer, Seller 8/1/05 88 WA05AB WaMu Asset Acceptance Corp. 2005-AR13 Trustee Depositor, Servicer, Seller 10/25/05 10/1/05 89 WA05AC WaMu Asset Acceptance Corp. 2005-AR16 Trustee Depositor, Servicer, Seller 10/25/05 11/1/05 Page 3 of 4 Case 1:09-cv-01656-RMC Document 32-1 Filed 09/08/10 Page 4 of 52 ID No. Transaction Series DBNTC Role(s) WaMu Role(s) MLPA Date PSA Date 90 WA05AD WaMu Asset Acceptance Corp. 2005-AR18 Trustee Depositor, Servicer, Seller 10/25/05 12/1/05 91 WA0601 Washington Mutual Home Equity Trust I Trustee Depositor, Servicer, Seller 1/31/06 92 WA0602 WaMu 2006-OA1 Trustee Depositor, Servicer, Seller 11/30/06 93 WA06A1 WaMu Asset Acceptance Corp. 2006-AR1 Trustee Depositor, Servicer, Seller 10/25/05 1/1/06 94 WA06A3 WaMu Asset Acceptance Corp. 2006-AR3 Trustee Depositor, Servicer, Seller 10/5/05 2/1/06 95 WA06A4 Washington Mutual Mortgage Securities Corp. 2006-AR4 Trustee Depositor, Servicer, Seller 10/25/05 4/1/06 96 WA06A5 WaMu Asset Acceptance Corp. 2006-AR5 Trustee Depositor, Servicer, Seller 10/25/05 5/1/06 97 WA0701 WaMu 2007-Flex1 Trustee Depositor, Servicer, Issuer 10/25/07 98 MS0001 Morgan Stanley ABS Capital I Inc. 2000-1 Indenture Trustee Master Servicer, Seller 4/1/00 7/1/00 99 CO9201 Coast Federal 1992-1 Trustee Depositor, Master Servicer, Seller 8/1/92 1 Pursuant to the PSA, WaMu acts as the Master Servicer and Responsible Party. Under Section 2.03 of the PSA, WaMu, as Responsible Party, makes the representations and warranties set forth in the MLPA as well as certain additional representations set forth in the PSA itself and agrees that such representations and warranties shall inure to the benefit of the Depositor [GS Mortgage Securities Corp.] and the Trustee. Under Sections 2.03 and 2.08 of the PSA, the Responsible Party agrees that the Trustee may enforce against the Responsible Party the repurchase rights set forth in Section 2.03 of the PSA and in the MPLA. Page 4 of 4 Case 1:09-cv-01656-RMC Document 32-1 Filed 09/08/10 Page 5 of 52
EXHIBIT 1B Case 1:09-cv-01656-RMC Document 32-1 Filed 09/08/10 Page 6 of 52 Exhibit 1-B Secondary Trusts ID No. Transaction Series DBNTC Role(s) Agreement 1 LB05N6 Long Beach Asset Holding Corp. CI-2005-WL3 Trustee Indenture Agreement 12/7/2005 2 LB03P1 Long Beach Securities Corp. 2003-P1 (2003-W5) Trustee Indenture Agreement 04/30/2003 3 LB03P2 Long Beach Securities Corp. 2003-W9 Trustee Indenture Agreement 6/26/2003 4 LB04N2 Long Beach Asset Holding Corp. 2004-2 Indenture Trustee Indenture Agreement 5/26/2004 5 LB04N4 Long Beach Asset Holding Corp. 2004-4 Indenture Trustee Indenture Agreement 11/24/2004 6 LB04N6 Long Beach Asset Holding Corp. 2004-6 Indenture Trustee Indenture Agreement 10/29/2004 7 LB05N2 Long Beach Asset Holding Corp. 2005-2 Indenture Trustee Indenture Agreement 04/26/2005 8 LB05N3 Long Beach Asset Holding Corp. CI-2005-WL1 Indenture Trustee Indenture Agreement 10/21/2005 9 LB05N4 Long Beach Asset Holding Corp. CI-2005- WL2 Indenture Trustee Indenture Agreement 09/07/2005 10 LB05N5 Long Beach Asset Holding Corp. 2005-3 Indenture Trustee Indenture Agreement 09/20/2005 11 LB06N2 Long Beach Asset Holding Corp. 2006-WL2 Indenture Trustee Indenture Agreement 3/20/2006 12 LB06N4 Long Beach Asset Holding Corp. 2006-1 Indenture Trustee Indenture Agreement 02/28/2006 13 LB06N5 Long Beach Asset Holding Corp. 2006-2 Indenture Trustee Indenture Agreement 03/30/2006 14 LB06N6 Long Beach Asset Holding Corp. CI 2006-3 Indenture Trustee Indenture Agreement 04/27/2006 15 LB06N7 Long Beach CI NIM Notes 2006-4 Indenture Trustee Indenture Agreement 05/30/2006 16 LB06N8 Long Beach CI NIM Notes 2006-5 Indenture Trustee Indenture Agreement 06/30/2006 17 LB06N9 Long Beach CI NIM Notes 2006-6 Indenture Trustee Indenture Agreement 07/31/2006 18 LB06NA Long Beach CI NIM Notes 2006-7 Indenture Trustee Indenture Agreement 08/31/2006 19 LB06NB Long Beach CI NIM Notes 2006-8 Indenture Trustee Indenture Agreement 09/27/2006 20 LB06NC Long Beach CI NIM Notes 2006-9 Indenture Trustee Indenture Agreement 10/30/2006 21 LB06ND Long Beach CI NIM Notes 2006-10 Indenture Trustee Indenture Agreement 11/21/2006 22 LB06NE Long Beach CI NIM Notes 2006-11 Indenture Trustee Indenture Agreement 12/27/2006 23 LB07P3 Long Beach Asset Holdings Corp CI 2003-3 Indenture Trustee Subordinate Note Paying Agency Agreement 11/16/2007 24 LB07P4 Long Beach Asset Holdings Corp CI 2003-3 Indenture Trustee Subordinate Note Paying Agency Agreement 11/16/2007 25 WA07N1 WaMu CI NIM Notes 2003-4 Indenture Trustee Indenture Agreement 01/30/2007 26 WA06C1 WM Covered Bond Program 1 Mortgage Bond Indenture Trustee, Asset Monitor Amended and Restated Indenture 05/18/2007 27 WA06C2 WM Covered Bond Program 2 Mortgage Bond Indenture Trustee, Asset Monitor Bond Indenture 09/27/2006 28 WA07C3 WM Covered Bond Program 3 Mortgage Bond Indenture Trustee, Securities Intermediary Amended and Restated Mortgage Bond Indenture 05/18/2007 Page 1 of 1 Case 1:09-cv-01656-RMC Document 32-1 Filed 09/08/10 Page 7 of 52
EXHIBIT 2 Case 1:09-cv-01656-RMC Document 32-1 Filed 09/08/10 Page 8 of 52 PURCHASE AND ASSUMPTION AGREEMENT WHOLE BANK AMONG FEDERAL DEPOSIT INSURACE CORPORATION, RECEIVER OF WASHINGTON MUTUAL BANK, HENDERSON, NEVADA FEDERAL DEPOSIT INSURANCE CORPORATION and JPMORGAN CHASE BANK, NATIONAL ASSOCIATION DATED AS OF SEPTEMBER 25, 2008 Case 1:09-cv-01656-RMC Document 32-1 Filed 09/08/10 Page 9 of 52 ARTICLE I ARTICLE II 2.1 2.2 2.3 2.4 2.5 ARTICLE III 3.1 3.2 3.3 3.4 3.5 3.6 ARTICLE IV 4.1 4.2 4.3 4.4 4.5 4.6 4.7 4.8 4.9 4.10 4.11 4.12 4.13 Execution Copy Whole Bank P&A T ABLE OF CONTENTS DEFINITIONS ...........................................................................................2 ASSUMPTION OF LIABILITIES...........................................................8 Liabilities Assumed by Assuming Ban ......................................................8 Interest on Deposit Liabilities ......................................................................8 Unclaimed Deposits ........ ........ ........ ............... ............... .......... .... ............. ....8 Omitted ........................................................................................................9 Borrower Claims..........................................................................................9 PURCHASE OF ASSETS .........................................................................9 Assets Purchased by Assuming Ban ..........................................................9 Asset Purchase Price ....................................................................................9 Maner of Conveyance; Limited Waranty; Nonrecourse; Etc............... ........... ..... ............. .............. ..................1 0 Puts of Assets to the Receiver....................................................................10 Assets Not Purchased by Assuming Ban .................................... ............ .11 Assets Essential to Receiver.. ............ .......... ....... ................. ......................11 ASSUMPTION OF CERTAIN DUTIES AND OBLIGATIONS........13 Continuation of Baning Business........... ....... ........... ...................... ..........13 Agreement with Respect to Credit Card Business ....... ........................ ......13 Agreement with Respect to Safe Deposit Business ...................................13 Agreement with Respect to Safekeeping Business ...... ....... .................... ...13 Agreement with Respect to Trust Business ...............................................13 Agreement with Respect to Ban Premises ...............................................14 Agreement with Respect to Leased Data Processing Equipment................................................................... .16 Agreement with Respect to Certain Existing Agreements.................................................................... ..16 Informational Tax Reporting.... ................... ........ ........... .................. .........17 Insurance. ..... . .. ........... .. .. .. ....... .. . ........ ........ .......... ......... .......... ...................1 7 Office Space for Receiver and Corporation ........ ........ .......... .....................17 Omitted ......................................................................................................18 Omitted .....................................................................................................18 ii Washington Mutual Bank Henderon. Nevada Case 1:09-cv-01656-RMC Document 32-1 Filed 09/08/10 Page 10 of 52 ARTICLE V 5.1 5.2 5.3 ARTICLE VI 6.1 6.2 6.3 6.4 ARTICLE VII ARTICLE VIII ARTICLE IX 9.1 9.2 9.3 9.4 9.5 9.6 9.7 ARTICLE X ARTICLE XI ARTICLE XII 12.1 12.2 12.3 12.4 12.5 12.6 12.7 12.8 Execution Copy Whole Bank P&A DUTIES WITH RESPECT TO DEPOSITORS OF THE FAILED BANK........................................................................18 Payment of Checks, Drafts and Orders ." .......................... ................ .........18 Certain Agreements Related to Deposits ............................................... ....18 Notice to Depositors. ........... ........ .............. ..................... .......................... .18 RECORDS ................................................................................................19 Transfer of Records.......................................................................... ..........19 Delivery of Assigned Records ........... ............ ................ ......... .............. .....20 Preservation of Records .............................................................................20 Access to Records; Copies.........................................................................20 BID; INITIAL PAYMENT .....................................................................20 PRO FO RMA ............................................................................................20 CONTINUING COOPERATION..........................................................21 General Matters..........................................................................................21 Additional Title Documents.......................................................................21 Claims and Suits.... ......... ............................ ..... ........ ......... ....................... ..21 Payment of Deposits .................. .................. .............................. ............ ....22 Withheld Payments ....................................................................................22 Proceedings with Respect to Certain Assets and Liabilities.................................................................................22 Information.... ......... ........ ..... ......................... .... .... ......................... ......... ....23 CONDITION PRECEDENT ..................................................................23 REPRESENTATIONS AND WARTIES OF THE ASSUMING BANK .................................................................................23 INDEMNIFICATION .............................................................................24 Indemnification of Indemnitees .................................................................25 Conditions Precedent to Indemnification...................................................27 No Additional Waranty.............................................................................28 Indemnification of Corporation and Receiver............................................29 Obligations Supplemental..........................................................................29 Criminal Claims.............................................................. ....................... ....29 Limited Guaranty of the Corporation.........................................................29 Subrogation .. ........................... ....................... .... ....... .................................30 11 Washington Mutual Bank Henderson. Nevada Case 1:09-cv-01656-RMC Document 32-1 Filed 09/08/10 Page 11 of 52 ARTICLE XIII 13.1 13.2 13.3 13.4 13.5 13.6 13.7 13.8 13.9 13.10 13.11 13.12 13.13 SCHEDULES 2.1 3.2 3.5 EXHIBIT 3.2(c) Execution Copy Whle Bank P&A MISCELLANEOUS ................................................................................30 Entire Agreement .................................. ..... ............ ........ ..... ...... .......... .......30 Headings .... ............................................................... ..... ........ .................. ..30 Counterpars.............................................................................................. .30 Governing Law......................................................... ........ ........ .......... .......30 Successors.. ...... ...... ...................... .................. .... ............ ..... ............. ...... ....30 Modification; Assignent .................. ................... ......... ........... ...... ..........31 Notice ........................................................................................................31 Maner of Payment.............................................. ......... .......... .............. .....31 Costs, Fees and Expenses ..........................................................................32 Waiver........................................................................................................32 Severability...... ... ...... .... .......... ............ ...... ..... .... ... ...... ...... ....... ..................32 Term of Agreement....................................................................................32 Survival of Covenants, Etc. .......................................................................32 Certain Liabilities Not Assumed................................................................34 Purchase Price of Assets or Assets .... ........... ................... ...... ...... ......... .....35 Certain Assets Not Purchased....................................................................37 Valuation of Certain Qualified Financial Contracts....... ..... ........... ......... ..38 iv Washington Mutual Bank Hendern. Nevada Case 1:09-cv-01656-RMC Document 32-1 Filed 09/08/10 Page 12 of 52 PURCHASE AND ASSUMPTION AGREEMENT WHOLE BANK THIS AGREEMENT, made and entered into as of the 25th day of September, 2008, by and among the FEDERAL DEPOSIT INSURANCE CORPORATION, RECEIVER of WASHINGTON MUTUAL BANK, HENDERSON, NEVADA (the "Receiver"), JPMORGAN CHASE BANK, NATIONAL ASSOCIATION, organized under the laws of the United States of America, and having its principal place of business in Seattle, Washington (the "Assuming Ban"), and the FEDERAL DEPOSIT INSURANCE CORPORATION, organized under the laws of the United States of America and having its principal offce in Washington, D.C., acting in its corporate capacity (the "Corporation"). WITNESSETH: WHEREAS, on Ban Closing, the Charering Authority closed Washington Mutual Ban (the "Failed Ban") pursuant to applicable law and the Corporation was appointed Receiver thereof; and WHEREAS, the Assuming Ban desires to purchase substantially all of the assets and assume all deposit and substantially all other liabilities of the Failed Ban on the terms and conditions set fort in this Agreement; and WHEREAS, pursuant to 12 U.S.C. Section 1823(c)(2)(A), the Corporation may provide assistance to the Assuming Ban to facilitate the transactions contemplated by this Agreement, which assistance may include indemnification pursuant to Aricle XII; and WHEREAS, the Board of Directors ofthe Corporation (the "Board") has determined to provide assistace to the Assuming Ban on the terms and subject to the conditions set forth in this Agreement; and WHEREAS, the Board has determined pursuant to 12 U.S.C. Section 1823(c)(4)(A) that such assistance is necessar to meet the obligation of the Corporation to provide insurance coverage for the insured deposits in the Failed Ban and is the least costly to the deposit insurance fud of all possible methods for meeting such obligation. NOW THEREFORE, in consideration of the mutual promises herein set forth and other valuable consideration, the paries hereto agree as follows: Case 1:09-cv-01656-RMC Document 32-1 Filed 09/08/10 Page 13 of 52 ARTICLE I DEFINITIONS Capitalized terms used in this Agreement shall have the meanings set forth in this Aricle I, or elsewhere in this Agreement. As used herein, words imparing the singular include the plural and vice versa. "Accounting Records" means the general ledger and subsidiar ledgers and supporting schedules which support the general ledger balances. "Acquired Subsidiaries" means Subsidiares of the Failed Ban acquired pursuant to Section 3.1. "Adversely Classified" means, with respect to any Loan or security, a Loan or security which has been designated in the most recent report of examination as "Substandard," "Doubtful" or "Loss" by the Failed Ban's appropriate Federal or State Charering Authority or regulator. "Affliate" of any Person means any director, offcer, or employee of that Person and any other Person (i) who is directly or indirectly controllng, or controlled by, or under direct or indirect common control with, such Person, or (ii) who is an affliate of such Person as the term "affliate" is defined in Section 2 of the Ban Holding Company Act of 1956, as amended, 12 U.S.C. Section 1841. "Agreement" means this Purchase and Assumption Agreement by and among the Assuming Ban, the Corporation and the Receiver, as amended or otherwise modified from time to time. "Assets" means all 'assets of the Failed Ban purchased pursuant to Section 3.1. Assets owned by Subsidiares of the Failed Bank are not "Assets" within the meaning of this definition. "Assumed Deposits" means Deposits. "Bank Closing" means the close of business of the Failed Ban on the date on which the Charering Authority closed such institution. "Bank Premises" means the baning houses, drive-in baning facilities, and teller facilities (staffed or automated) together with appurtenant parking, storage and service facilities and structures connecting remote facilities to baning houses, and land on which the foregoing are located, that are owned or leased by the Failed Ban and that are occupied by the Failed Ban as of Ban Closing. "Bid Amount" has the meaning provided in Aricle VII. 2 Execution Copy Whole Bank P&A Washington Mutual Bank Henderson, Nevada Case 1:09-cv-01656-RMC Document 32-1 Filed 09/08/10 Page 14 of 52 "Book Value" means, with respect to any Asset and any Liability Assumed, the dollar amount thereof stated on the Accounting Records of the Failed Bank. The Book Value of any item shall be determined as of Bank Closing after adjustments made by the Assuming Bank for normal operational and timing differences in accounts, suspense items, unposted debits and credits, and other similar adjustments or corrections and for setoffs, whether voluntar or involuntar. The Book Value ofa Subsidiar of the Failed Ban acquired by the Assuming Bank shall be determined from the investment in subsidiar and related accounts on the "ban only" (unconsolidated) balance sheet of the Failed Ban based on the equity method of accounting. Without limiting the generality of the foregoing, (i) the Book Value of a Liability Assumed shall include all accrued and unpaid interest thereon as of Ban Closing, and (ii) the Book Value of a Loan shall reflect adjustments for eared interest, or uneared interest (as it relates to the "rule of 78s" or add-on-interest loans, as applicable), if any, as of Ban Closing, adjustments for the portion of eared or uneared loan-related credit life and/or disability insurance premiums, if any, attributable to the Failed Ban as of Ban Closing, and adjustments for Failed Ban Advances, if any, in each case as determined for financial reporting purposes. The Book Value of an Asset shall not include any adjustment for loan premiums, discounts or any related deferred income or fees, or general or specific reserves on the Accounting Records of the Failed Ban. "Business Day" means a day other than a Saturday, Sunday, Federal legal holiday or legal holiday under the laws of the State where the Failed Ban is located, or a day on which the principal offce of the Corporation is closed. "Chartering Authority" means (i) with respect to a national ban, the Offce of the Comptroller of the Currency, (ii) with respect to a Federal savings association or savings ban, the Offce of Thrft Supervision, (iii) with respect to a ban or savings institution charered by a State, the agency of such State charged with primar responsibility for regulating and/or closing bans or savings institutions, as the case may be, (iv) the Corporation in accordance with 12 U.S.C. Section 1821(c), with regard to self appointment, or (v) the appropriate Federal baning agency in accordance with 12 U.S.C. 1821(c)(9). "Commitment" means the unfunded portion of a line of credit or other commitment reflected on the books and records of the Failed Ban to make an extension of credit (or additional advances with respect to a Loan) that was legally binding on the Failed Ban as of Ban Closing, other than extensions of credit pursuant to the credit card business and overdraft protection plans of the Failed Ban, if any. "Credit Documents" mean the agreements, instruments, certificates or other documents at any time evidencing or otherwise relating to, governing or executed in connection with or as security for, a Loan, including without limitation notes, bonds, loan agreements, letter of credit applications, lease financing contracts, baner's acceptances, drafts, interest protection agreements, currency exchange agreements, repurchase agreements, reverse repurchase agreements, guarantees, deeds of trust, mortgages, assignents, security agreements, pledges, subordination or priority agreements, lien priority agreements, undertakings, security instruments, certificates, documents, legal opinions, paricipation agreements and intercreditor agreements, and all amendments, modifications, renewals, extensions, rearangements, and substitutions with respect to any of the foregoing. 3 Execution Copy Whle Bank P&A Washington Mutual Bank Henderson. Nevada Case 1:09-cv-01656-RMC Document 32-1 Filed 09/08/10 Page 15 of 52 "Credit File" means all Credit Documents and all other credit, collateral, or insurance documents in the possession or custody of the Assuming Ban, or any of its Subsidiares or Affliates, relating to an Asset or a Loan included in a Put Notice, or copies of any thereof. "Data Processing Lease" means any lease or licensing agreement, binding on the Failed Ban as of Ban Closing, the subject of which is data processing equipment or computer hardware or softare used in connection with data processing activities. A lease or licensing agreement for computer software used in connection with data processing activities shall constitute a Data Processing Lease regardless of whether such lease or licensing agreement also covers data processing equipment. "Deposit" means a deposit as defined in 12 U.S.C. Section 1813(1), including without limitation, outstanding cashier's checks and other offcial checks and all uncollected items included in the depositors' balances and credited on the books and records of the Failed Ban; provided, that the term "Deposit" shall not include all or any portion of those deposit balances which, in the discretion of the Receiver or the Corporation, (i) may be required to satisfy it for any liquidated or contingent liability of any depositor arsing from an unauthorized or unlawful transaction, or (ii) may be needed to provide payment of any liability of any depositor to the Failed Ban or the Receiver, including the liability of any depositor as a director or offcer of the Failed Ban, whether or not the amount of the liability is or can be determined as of Ban Closing. "Failed Bank Advances" means the total swns paid by the Failed Ban to (i) protect its lien position, (ii) pay ad valorem taxes and hazard insurance, and (iii) pay credit life insurance, accident and health insurance, and vendor's single interest insurance. "Fixtures" means those leasehold improvements, additions, alterations and installations constituting all or a par of Ban Premises and which were acquired, added, built, installed or purchased at the expense of the Failed Ban, regardless of the holder of legal title thereto as of Ban Closing. "Furniture and Equipment" means the fuiture and equipment (other than leased data processing equipment, including hardware and softare), leased or owned by the Failed Ban and reflected on the books of the Failed Ban as of Ban Closing, including without limitation automated teller machines, careting, furniture, offce machinery (including personal computers), shelving, offce supplies, telephone, surveilance and security systems, and arork. "Indemnitees" means, except as provided in paragrph (11) of Section 12.1(b), (i) the Assuming Ban, (ii) the Subsidiares and Affliates of the Assuming Ban other than any Subsidiares or Affliates of the Failed Ban that are or become Subsidiares or Affliates of the Assuming Ban, and (iii) the directors, offcers, employees and agents of the Assuming Ban and its Subsidiares and Affliates who are not also present or former directors, offcers, employees or agents of the Failed Bank or of any Subsidiar or Affliate of the Failed Bank. 4 Execution Copy Whole Bank P&A Washington Mutual Bank Henderson. Nevada Case 1:09-cv-01656-RMC Document 32-1 Filed 09/08/10 Page 16 of 52 "Initial Payment" means the payment made pursuant to Article VII, the amount of which shall be either (i) if the Bid Amount is positive, the Bid Amount plus the Required Payment or (ii) if the Bid Amount is negative, the Required Payment minus the Bid Amount. The Initial Payment shall be payable by the Corporation to the Assuming Ban if the Initial Payment is a negative amount. The Initial Payment shall be payable by the Assuming Ban to the Corporation if the Initial Payment is positive. "Legal Balance" means the amount of indebtedness legally owed by an Obligor with respect to a Loan, including principal and accrued and unpaid interest, late fees, attorneys' fees and expenses, taxes, insurance premiums, and similar charges, if any. "Liabilties Assumed" has the meaning provided in Section 2.1. "bI" means any mortgage, lien, pledge, charge, assignent for security purposes, security interest, or encumbrance of any kind with respect to an Asset, including any conditional sale agreement or capital lease or other title retention agreement relating to such Asset. "Loans" means all of the following owed to or held by the Failed Ban as of Ban Closing: (i) loans (including loans which have been charged off the Accounting Records of the Failed Ban in whole or in par prior to Bank Closing), paricipation agreements, interests in paricipations, overdrafts of customers (including but not limited to overdrafts made pursuant to an overdraft protection plan or similar extensions of credit in connection with a deposit account), revolving commercial lines of credit, home equity lines of credit, Commitments, United States and/or State-guaranteed student loans, and lease financing contracts; (ii) all Liens, rights (including rights of set-off, remedies, powers, privileges, demands, claims, priorities, equities and benefits owned or held by, or accruing or to accrue to or for the benefit of, the holder of the obligations or instruments referred to in clause (i) above, including but not limited to those arsing under or based upon Credit Documents, casualty insurce policies and binders, standby letters of credit, mortgagee title insurance policies and binders, payment bonds and performance bonds at any time and from time to time existing with respect to any of the obligations or instruments referred to in clause (i) above; and (iii) all amendments, modifications, renewals, extensions, refinancings, and refundings of or for any of the foregoing; provided, that there shall be excluded from the definition of "Loans" amounts owing under Qualified Financial Contracts. "Obligor" means each Person liable for the full or parial payment or performance of any Loan, whether such Person is obligated directly, indirectly, primarly, secondarly, jointly, or severally. 5 Washington Mutual Bank Henderson. Nevada Execution Copy Whole Bank P&A Case 1:09-cv-01656-RMC Document 32-1 Filed 09/08/10 Page 17 of 52 "Other Real Estate" means all interests in real estate (other than Ban Premises and Fixtures), including but not limited to mineral rights, leasehold rights, condominium and cooperative interests, air rights and development rights that are owned by the Failed Ban. "Payment Date" means the first Business Day after Ban Closing. "Person" means any individual, corporation, parnership, joint venture, association, joint-stock company, trust, unincorporated organization, or governent or any agency or political subdivision thereof, excluding the Corporation. "Primary Indemnitor" means any Person (other than the Assuming Ban or any of its Affliates) who is obligated to indemnify or insure, or otherwise make payments (including payments on account of claims made against) to or on behalf of any Person in connection with the claims covered under Aricle XII, including without limitation any insurer issuing any directors and offcers liability policy or any Person issuing a financial institution bond or baner's blanet bond. "Proforma" means producing a balance sheet that reflects a reasonably accurate financial statement of the Failed Ban through the date of closing. The Proforma financial statements sere as a basis for the opening entres of both the Assuming Ban and the Receiver. "Put Date" has the meaning provided in Section 3.4. "Put Notice" has the meaning provided in Section 3.4. "Qualified Financial Contract" means a qualified financial contract as defined in 12 U.S.c. Section 1821(e)(8)(D). "Record" means any document, microfiche, microfilm and computer records (including but not limited to magnetic tape, disc storage, card forms and printed copy) of the Failed Ban generated or maintained by the Failed Ban that is owned by or in the possession of the Receiver at Ban Closing. "Related Liabilty" with respect to any Asset means any liability existing and reflected on the Accounting Records of the Failed Ban as of Bank Closing for (i) indebtedness secured by mortgages, deeds oftrust, chattel mortgages, security interests or other liens on or affecting such Asset, (ii) ad valorem taxes applicable to such Asset, and (iii) any other obligation determined by the Receiver to be directly related to such Asset. "Related Liabilty Amount" with respect to any Related Liabilty on the books of the Assuming Ban, means the amount of such Related Liability as stated on the Accounting Records of the Assuming Ban (as maintained in accordance with generally accepted accounting principles) as of the date as of which the Related Liability Amount is being determined. With respect to a liability that relates to more than one asset, the amount of such Related Liability shall be allocated among such assets for the purpose of determining the Related Liability Amount with 6 Execution Copy Whole Bank P&A Washington Mutual Bank Henderson. Nevada Case 1:09-cv-01656-RMC Document 32-1 Filed 09/08/10 Page 18 of 52 respect to anyone of such assets. Such allocation shall be made by specific allocation, where determinable, and otherwise shall be pro rata based upon the dollar amount of such assets stated on the Accounting Records of the entity that owns such asset. "Required Payment" means $50,000,000.00. "Repurchase Price" means with respect to any Asset or asset, which shall be determined by the Receiver, the lesser of (a) or (b): (a) (i) in the event of a negative Bid Amount, the amount paid by the Assuming Ban, discounted by a percentage equal to the quotient produced by dividing the Assuming Ban's Bid Amount by the aggregate Book Value of the Risk Assets of the Failed Ban; (ii) in the event of a negative Bid Amount, the amount resulting from (a)(i), above, or in the event of a positive Bid Amount, the amount paid by the Assuming Ban, (x) for a Loan, shall be decreased by any portion of the Loan classified "loss" and by one-half of any portion of the Loan classified "doubtful" as of the date of Ban Closing, and (y) for any Asset or asset, including a Loan, decreased by the amount of any money received with respect thereto since Ban Closing and, ifthe Asset is a Loan or other interest bearng or earing asset, the resulting amount shall then be increased or decreased, as the case may be, by interest or discount (whichever is applicable) accrued from and after Bank Closing at the lower of: (i) the contract rate with respect to such Asset, or (ii) the Settlement Interest Rate; net proceeds received by or due to the Assuming Ban from the sale of collateral, any forgiveness of debt, or otherwise shall be deemed money received by the Assuming Ban; or (b) the dollar amount thereof stated on the Accounting Records of the Assuming Ban as of the date as of which the Repurchase Pnce is being determined, as maintained in accordance with generally accepted accounting principles, and, ifthe asset is a Loan, regardless of the Legal Balance thereof and adjusted in the same maner as the Book Value of a Failed Ban Loan would be adjusted hereunder. Provided, however, (b), above, shall not be applicable and the Bid Amount shall be considered to have been positive for Loans repurchased pursuant to Section 3.4(a). "Risk Assets" means (i) all Loans purchased hereunder, excluding (a) New Loans and (b) Loans to the extent secured by Assumed Deposits (and not included in (i)(a)), plus (ii) the Accrued Interest Receivable, Prepaid Expense, and Other Assets. "Safe Deposit Boxes" means the safe deposit boxes of the Failed Ban, ifany, including the removable safe deposit boxes and safe deposit stacks in the Failed Ban's vault(s), all rights and benefits (other than fees collected prior to Ban Closing) under rental agreements with respect to such safe deposit boxes, and all keys and combinations thereto. "Settlement Date" means the first Business Day immediately prior to the day which is one hundred eighty (180) days after Ban Closing, or such other date pnor thereto as 7 Execution Copy Whole Bank P&A Washington Mutual Bank Henderon. Nevada Case 1:09-cv-01656-RMC Document 32-1 Filed 09/08/10 Page 19 of 52 may be agreed upon by the Receiver and the Assuming Bank. The Receiver, in its discretion, may extend the Settlement Date. "Settlement Interest Rate" means, for the first calendar quarer or portion thereof during which interest accrues, the rate determined by the Receiver to be equal to the equivalent coupon issue yield on twenty-six (26)-week United States Treasury Bils in effect as of Ban Closing as published in The Wall Street Journal; provided, that ifno such equivalent coupon issue yield is available as of Ban Closing, the equivalent coupon issue yield for such Treasury Bils most recently published in The Wall Street Journal prior to Ban Closing shall be used. Thereafter, the rate shall be adjusted to the rate determined by the Receiver to be equal to the equivalent coupon issue yield on such Treasury Bils in effect as of the first day of each succeeding calendar quarer during which interest accrues as published in The Wall Street Journal. "Subsidiary" has the meaning set forth in Section 3(w)(4) of the Federal Deposit Insurance Act, 12 U.S.C. Section 1813(w)(4), as amended. ARTICLE II ASSUMPTION OF LIABILITIES 2.1 Liabilties Assumed by Assuming Bank. Subject to Sections 2.5 and 4.8, the Assuming Ban expressly assumes at Book Value (subject to adjustment pursuant to Aricle VII) and agrees to pay, perform, and discharge, all of the liabilities of the Failed Ban which are reflected on the Books and Records of the Failed Ban as of Ban Closing, including the Assumed Deposits and all liabilities associated with any and all employee benefit plans, except as listed on the attached Schedule 2.1, and as otherwise provided in this Agreement (such liabilities referred to as "Liabilities Assumed"). Notwithstanding Section 4.8, the Assuming Ban specifically assumes all mortgage servicing rights and obligations of the Failed Ban. 2.2 Interest on Deposit Liabilties. The Assuming Ban agrees that it wil assume all deposit contracts as of Ban Closing, and it wil accrue and pay interest on Deposit liabilities assumed pursuant to Section 2.1 at the same rate(s) and on the same terms as agreed to by the Failed Ban as existed as of Ban Closing. If such Deposit has been pledged to secure an obligation of the depositor or other pary, any withdrawal thereof shall be subject to the terms of the agreement governing such pledge. 2.3 Unclaimed Deposits. If, within eighteen (18) months after Ban Closing, any depositor of the Failed Ban does not claim or arange to continue such depositor's Deposit assumed pursuant to Section 2.1 at the Assuming Ban, the Assuming Ban shall, within fifteen (15) Business Days after the end of such eighteen (18)-month period, (i) refud to the Corporation the full amount of each such Deposit (without reduction for service charges), (ii) provide to the Corporation an electronic schedule of all such refunded Deposits in such form as may be prescribed by the Corporation, and (iii) assign, transfer, convey and deliver to the Receiver all right, title and interest of the Assuming Ban in and to Records previously transferred to the Assuming Ban and other records generated or maintained by the Assuming Ban pertaining to such Deposits. During such eighteen (18)-month period, at the request of the 8 Execution Copy Whole Bank P&A Washington Mutual Bank Henderson. Nevada Case 1:09-cv-01656-RMC Document 32-1 Filed 09/08/10 Page 20 of 52 Corporation, the Assuming Ban promptly shall provide to the Corporation schedules of unclaimed deposits in such form as may be prescribed by the Corporation. 2.4 Omitted. 2.5 Borrower Claims. Notwithstanding anything to the contrar in this Agreement, any liability associated with borrower claims for payment of or liability to any borrower for monetar relief, or that provide for any other form of relief to any borrower, whether or not such liability is reduced to judgment, liquidated or unliquidated, fixed or contingent, matured or unmatured, disputed or undisputed, legal or equitable, judicial or extra-judicial, secured or unsecured, whether asserted affrmatively or defensively, related in any way to any loan or commitment to lend made by the Failed Ban prior to failure, or to any loan made by a third pary in connection with a loan which is or was held by the Failed Ban, or otherwise arsing in connection with the Failed Ban's lending or loan purchase activities are specifically not assumed by the Assuming Ban. ARTICLE III PURCHASE OF ASSETS 3.1 Assets Purchased by Assuming Bank. Subject to Sections 3.5, 3.6 and 4.8, the Assuming Ban hereby purchases from the Receiver, and the Receiver hereby sells, assigns, transfers, conveys, and delivers to the Assuming Ban, all right, title, and interest of the Receiver in and to all of the assets (real, personal and mixed, wherever located and however acquired) including all subsidiares, joint ventures, parnerships, and any and all other business combinations or arangements, whether active, inactive, dissolved or terminated, of the Failed Ban whether or not reflected on the books of the Failed Ban as of Ban Closing. Assets are purchased hereunder by the Assuming Ban subject to all liabilities for indebtedness collateralized by Liens affecting such Assets to the extent provided in Section 2.1. The subsidiares, joint ventures, parnerships, and any and all other business combinations or arangements, whether active, inactive, dissolved or terminated being purchased by the Assuming Ban includes, but is not limited to, the entities listed on Schedule 3.1a. Notwithstanding Section 4.8, the Assuming Ban specifically purchases all mortgage servicing rights and obligations of the Failed Ban. 3.2 Asset Purchase Price. (a) All Assets and assets of the Failed Ban subject to an option to purchase by the Assuming Ban shall be purchased for the amount, or the amount resulting from the method specified for deterining the amount, as specified on Schedule 3.2, except as otherwise may be provided herein. Any Asset, asset of the Failed Ban subject to an option to purchase or other asset purchased for which no purchase price is specified on Schedule 3.2 or otherwise herein shall be purhased at its Book Value. Loans or other assets charged ofT the Accounting Records of the Failed Ban prior to the date of Ban Closing shall be purchased at a price of zero. 9 Execution Copy Whole Bank P&A Washington Mutual Bank Henderon, Nevada Case 1:09-cv-01656-RMC Document 32-1 Filed 09/08/10 Page 21 of 52 (b) The purchase price for securities (other than the capital stock of any Acquired Subsidiary) purchased under Section 3.1 by the Assuming Ban shall be the market value thereof as of Bank Closing, which market value shall be (i) the "Mid/Last", or "Trade" (as applicable), market price for each such security quoted at the close of the trading day effective on Bank Closing as published electronically by Bloomberg, L.P.; (ii) provided, that if such market price is not available for any such security, the Assuming Ban wil submit a bid for each such security within thee days ofnotification/id request by the Receiver (unless a different time period is agreed to by the Assuming Ban and the Receiver) and the Receiver, in its sole discretion wil accept or reject each such bid; and (iii) further provided in the absence of an acceptable bid from the Assuming Ban, each such security shall not pass to the Assuming Ban and shall be deemed to be an excluded asset hereunder. (c) Qualified Financial Contracts shall be purchased at market value determined in accordance with the terms of Exhibit 3.2(c). Any costs associated with such valuation shall be shared equally by the Receiver and the Assuming Ban. 3.3 Manner of Conveyance; Limited Warranty; Nonrecourse; Etc. THE CONVEYANCE OF ALL ASSETS, INCLUDING REAL AN PERSONAL PROPERTY INTERESTS, PURCHASED BY THE ASSUMING BANK UNER THIS AGREEMENT SHALL BE MADE, AS NECESSARY, BY RECEIVER'S DEED OR RECEIVER'S BILL OF SALE, "AS IS", "WHERE IS", WITHOUT RECOURSE AN, EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED IN THIS AGREEMENT, WITHOUT ANY WARTIES WHATSOEVER WITH RESPECT TO SUCH ASSETS, EXPRESS OR IMPLllD, WITH RESPECT TO TITLE, ENFORCEABILITY, COLLECTffILITY, DOCUMENTATION OR FREEDOM FROM LIENS OR ENCUMBRACES (IN WHOLE OR IN PART), OR AN OTHER MATTERS. 3.4 Puts of Assets to the Receiver. (a) Omitted. (b) Puts Prior to the Settlement Date. During the period from Ban Closing to and including the Business Day immediately preceding the Settlement Date, the Assuming Ban shall be entitled to require the Receiver to purchase any Asset which the Assuming Ban can establish is evidenced by forged or stolen instruments as of Ban Closing. The Assuming Ban shall transfer all such Assets to the Receiver without recourse, and shall indemnify the Receiver against any and all claims of any Person claiming by, through or under the Assuming Ban with respect to any such Asset, as provided in Section 12.4. (c) Notices to the Receiver. In the event that the Assuming Ban elects to require the Receiver to purchase one or more Assets, the Assuming Ban shall deliver to the Receiver a notice (a "Put Notice") which shall include: (i) a list of all Assets that the Assuming Ban requires the Receiver to purchase; 10 Execution Copy Whole Bank P&A Washington Mutual Bank Henderson. Nevada Case 1:09-cv-01656-RMC Document 32-1 Filed 09/08/10 Page 22 of 52 (ii) a list of all Related Liabilities with respect to the Assets identified pursuant to (i) above; and (iii) a statement of the estimated Repurchase Price of each Asset identified pursuant to (i) above as of the applicable Put Date. Such notice shall be in the form prescribed by the Receiver or such other form to which the Receiver shall consent. As provided in Section 9.6, the Assuming Ban shall deliver to the Receiver such documents, Credit Files and such additional information relating to the subject matter of the Put Notice as the Receiver may request and shall provide to the Receiver full access to all other relevant books and records. (d) Purchase by Receiver. The Receiver shall purchase Loans that are specified in the Put Notice and shall assume Related Liabilities with respect to such Loans, and the transfer of such Loans and Related Liabilities shall be effective as of a date determined by the Receiver which date shall not be later than thirty (30) days after receipt by the Receiver of the Credit Files with respect to such Loans (the "Put Date"). (e) Purchase Price and Payment Date. Each Loan purchased by the Receiver pursuant to this Section 3.4 shall be purchased at a price equal to the Repurchase Price of such Loan less the Related Liability Amount applicable to such Loan, in each case determined as of the applicable Put Date. If the difference between such Repurchase Price and such Related Liability Amount is positive, then the Receiver shall pay to the Assuming Ban the amount of such difference; if the difference between such amounts is negative, then the Assuming Ban shall pay to the Receiver the amount of such difference. The Assuming Ban or the Receiver, as the case may be, shall pay the purchase price determined pursuant to this Section 3.4( e) not later than the twentieth (20th) Business Day following the applicable Put Date, together with interest on such amount at the Settlement Interest Rate for the period from and including such Put Date to and including the day preceding the date upon which payment is made. (f) Servicing. The Assuming Ban shall administer and manage any Asset subject to purchase by the Receiver in accordance with usual and prudent baning standards and business practices until such time as such Asset is purchased by the Receiver. (g) Reversals. In the event that the Receiver purchases an Asset (and assumes the Related Liability) that it is not required to purchase puruant to this Section 3.4, the Assuming Ban shall repurchase such Asset (and assume such Related Liability) from the Receiver at a price computed so as to achieve the same economic result as would apply if the Receiver had never purhased such Asset pursuant to this Section 3.4 3.5 Assets Not Purchased by Assuming Bank. The Assuming Ban does not purchase, acquire or assume, or (except as otherwise expressly provided in this Agreement) obtain an option to purchase, acquire or assume under this Agreement the assets or Assets listed on the attached Schedule 3.5. 3.6 Assets Essential to Receiver. 11 Execution Copy Whole Bank P&A Washington Mutual Bank Henderon. Nevada Case 1:09-cv-01656-RMC Document 32-1 Filed 09/08/10 Page 23 of 52 (a) The Receiver may refuse to sell to the Assuming Ban, or the Assuming Bank agrees, at the request of the Receiver set forth in a written notice to the Assuming Ban, to assign, transfer, convey, and deliver to the Receiver all of the Assuming Ban's right, title and interest in and to, any Asset or asset essential to the Receiver as determined by the Receiver in its discretion (together with all Credit Documents evidencing or pertaining thereto), which may include any Asset or asset that the Receiver determines to be: (i) made to an offcer, director, or other Person engaging in the affairs of the Failed Ban, its Subsidiares or Affliates or any related entities of any of the foregoing; (ii) the subject of any investigation relating to any claim with respect to any item described in Section 3.5(a) or (b), or the subject of, or potentially the subject of, any legal proceedings; (iii) made to a Person who is an Obligor on a loan owned by the Receiver or the Corporation in its corporate capacity or its capacity as receiver of any institution; (iv) secured by collateral which also secures any asset owned by the Receiver; or (v) related to any asset of the Failed Ban not purchased by the Assuming Ban under this Aricle II or any liability of the Failed Ban not assumed by the Assuming Ban under Aricle II. (b) Each such Asset or asset purchased by the Receiver shall be purchased at a price equal to the Repurchase Price thereof less the Related Liability Amount with respect to any Related Liabilities related to such Asset or asset, in each case determined as of the date of the notice provided by the Receiver pursuant to Section 3.6(a). The Receiver shall pay the Assuming Ban not later than the twentieth (20th) Business Day following receipt of related Credit Documents and Credit Files together with interest on such amount at the Settlement Interest Rate for the period from and including the date of receipt of such documents to and including the day preceding the day on which payment is made. The Assuming Ban agrees to administer and manage each such Asset or asset in accordance with usual and prudent baning standards and business practices until each such Asset or asset is purchased by the Receiver. All transfers with respect to Asset or assets under this Section 3.6 shall be made as provided in Section 9.6. The Assuming Ban shall transfer all such Asset or assets and Related Liabilities to the Receiver without recourse, and shall indemnify the Receiver against any and all claims of any Person claiming by, through or under the Assuming Ban with respect to any such Asset or asset, as provided in Section 12.4. ARTICLE iv 12 Execution Copy Whole Bank P&A Washington Mutual Bank Henderson, Nevada Case 1:09-cv-01656-RMC Document 32-1 Filed 09/08/10 Page 24 of 52 ASSUMPTION OF CERTAIN DUTIES AND OBLIGATIONS The Assuming Bank agrees with the Receiver and the Corporation as follows: 4.1 Continuation of Banking Business. The Assuming Ban agrees to provide full service banking in the trade area of the Failed Ban commencing on the first baning business day (including a Saturday) after Ban Closing. At the option of the Assuming Ban, such baning services may be provided at any or all of the Ban Premises, or at other premises within such trade area. 4.2 Agreement with Respect to Debit and Credit Card Business. The Assuming Bank agrees to honor and perform, from and after Ban Closing, all duties and obligations with respect to the Failed Ban's debit and credit card business, and/or processing related to debit and credit cards, if any, and assumes all outstanding extensions of credit with respect thereto. 4.3 Agreement with Respect to Safe Deposit Business. The Assuming Ban assumes and agrees to discharge, from and after Ban Closing, in the usual course of conducting a baning business, the duties and obligations of the Failed Ban with respect to all Safe Deposit Boxes, if any, of the Failed Ban and to maintain all of the necessar facilities for the use of such boxes by the renters thereof during the period for which such boxes have been rented and the rent therefor paid to the Failed Ban, subject to the provisions of the rental agreements between the Failed Ban and the respective renters of such boxes; provided, that the Assuming Ban may relocate the Safe Deposit Boxes of the Failed Ban to any offce of the Assuming Ban located in the trade area of the Failed Ban. Fees related to the safe deposit business collected prior to Ban Closing shall be for the benefit of the Receiver and fees collected after Ban Closing shall be for the benefit of the Assuming Ban. 4.4 Agreement with Respect to Safekeeping Business. The Receiver transfers, conveys and delivers to the Assuming Ban and the Assuming Ban accepts all securities and other items, if any, held by the Failed Ban in safekeeping for its customers as of Ban Closing. The Assuming Ban assumes and agrees to honor and discharge, from and after Ban Closing, the duties and obligations of the Failed Ban with respect to such securities and items held in safekeeping. The Assuming Ban shall be entitled to all rights and benefits heretofore accrued or hereafter accruing with respect thereto; provided, that, fees related to the safe keeping business collected prior to Ban Closing shall be for the benefit of the Receiver and fees collected afer Ban Closing shall be for the benefit of the Assuming Ban. The Assuming Ban shall provide to the Receiver wrtten verification of all assets held by the Failed Bank for safekeeping within sixty (60) days after Ban Closing. 4.5 Agreement with Respect to Trust Business. (a) The Assuming Ban shall, without further transfer, substitution, act or deed, to the full extent permitted by law, succeed to the rights, obligations, properties, assets, investments, deposits, agreements, and trusts of the Failed Ban under trusts, executorships, administrations, guardianships, and agencies, and other fiduciar or representative capacities, all to the same extent as though the Assuming Ban had assumed the same from the Failed Ban prior to Ban 13 Execution Copy Whole Bank P&A Washington Mutual Bank Henderson. Nevada Case 1:09-cv-01656-RMC Document 32-1 Filed 09/08/10 Page 25 of 52 Closing; provided, that any liability based on the misfeasance, malfeasance or nonfeasance of the Failed Bank, its directors, officers, employees or agents with respect to the trust business is not assumed hereunder. (b) The Assuming Ban shall, to the full extent permitted by law, succeed to, and be entitled to take and execute, the appointment to all executorships, trusteeships, guardianships and other fiduciar or representative capacities to which the Failed Ban is or may be named in wils, whenever probated, or to which the Failed Ban is or may be named or appointed by any other instrument. (c) In the event additional proceedings of any kind are necessar to accomplish the transfer of such trust business, the Assuming Ban agrees that, at its own expense, it will take whatever action is necessar to accomplish such transfer. The Receiver agrees to use reasonable efforts to assist the Assuming Ban in accomplishing such transfer. (d) The Assuming Ban shall provide to the Receiver written verification of the assets held in connection with the Failed Ban's trst business within sixty (60) days after Ban Closing. 4.6 Agreement with Respect to Bank Premises. (a) Option to Lease. The Receiver hereby grants to the Assuming Ban an exclusive option for the period of ninety (90) days commencing the day after Ban Closing to cause the Receiver to assign to the Assuming Ban any or all leases for leased Ban Premises, if any, which have been continuously occupied by the Assuming Ban from Ban Closing to the date it elects to accept an assignent of the leases with respect thereto to the extent such leases can be assigned; provided, that the exercise of this option with respect to any lease must be as to all premises or other propert subject to the lease. If an assignent canot be made of any such leases, the Receiver may, in its discretion, enter into subleases with the Assuming Ban containing the same terms and conditions provided under such existing leases for such leased Ban Premises or other property. The Assuming Ban shall give notice to the Receiver within the option period of its election to accept or not to accept an assignment of any or all leases (or enter into subleases or new leases in lieu thereof). The Assuming Ban agrees to assume all leases assigned (or enter into subleases in lieu thereof) pursuant to this Section 4.6. (b) Faciltation. The Receiver agrees to facilitate the assumption, assignent or sublease of leases or the negotiation of new leases by the Assuming Ban; provided, that neither the Receiver nor the Corporation shall be obligated to engage in litigation, make payments to the Assuming Ban or to any third pary in connection with facilitating any such assumption, assignent, sublease or negotiation or commit to any other obligations to third paries. (c) Occupancy. The Assuming Ban shall give the Receiver fifteen (15) days' prior wrtten notice of its intention to vacate prior to vacating any leased Ban Premises with respect to which the Assuming Ban has not exercised the option provided in Section 4.6(a). Any such notice shall be deemed to terminate the Assuming Ban's option with respect to such leased Ban Premises. 14 Washington Mutual Bank Henderson. Nevada Execution Copy Whole Bank P&A Case 1:09-cv-01656-RMC Document 32-1 Filed 09/08/10 Page 26 of 52 (d) Occupancy Costs. (i) The Assuming Ban agrees, during the period of any occupancy by it of leased Ban Premises, to pay to the Receiver, or to appropriate third paries at the direction of the Receiver, all operating costs with respect thereto and to comply with all relevant terms of applicable leases entered into by the Failed Bank, including without limitation the timely payment of all rent, taxes, fees, charges, utilities, insurance and assessments. (ii) The Assuming Ban agrees during the period of occupancy by it of leased Ban Premises to pay to the Receiver rent for the use of all leased Furniture and Equipment and all owned or leased Fixtures located on such Bank Premises for the period of such occupancy. Rent for such property owned by the Failed Bank shall be the market rental value thereof, as determined by the Receiver within sixty (60) days after Ban Closing. Rent for such leased property shall be an amount equal to any and all rent and other amounts which the Receiver incurs or accrues as an obligation or is obligated to pay for such period of occupancy pursuant to all leases and contracts with respect to such property. If the Assuming Ban purchases any owned Fixtures in accordance with Section 4.6(f), the amount of any rents paid by the Assuming Ban with respect thereto shall be applied as an offset against the purchase price thereof. (e) Certain Requirements as to Furniture, Equipment and Fixtures. If the Assuming Ban accepts an assignent of the lease (or enters into a sublease or a new lease in lieu thereof) for leased Ban Premises, or if the Assuming Ban does not exercise such option but within twelve (12) months following Ban Closing obtains the right to occupy such premises (whether by assignent, lease, sublease, purchase or otherise), other than in accordance with Section 4.6(a), the Assuming Ban shall (i) accept an assignent or a sublease of the leases or negotiate new leases for all Furniture and Equipment and Fixtures leased by the Failed Ban and located thereon, and (ii) if applicable, accept an assignent or a sublease of any ground lease or negotiate a new ground lease with respect to any land on which such Ban Premises are located; provided, that the Receiver shall not have disposed of such Furniture and Equipment and Fixtures or repudiated the leases specified in clause (i) or (ii). (f) Vacating Premises. If the Assuming Ban elects not to accept an assignent of the lease or sublease any leased Ban Premises, the notice of such election in accordance with Section 4.6(a) shall specify the date upon which the Assuming Ban's occupancy of such leased Ban Premises shall terminate, which date shall not be later than the date which is one hundred eighty (180) days after Ban Closing. Upon vacating such premises, the Assuming Ban shall relinquish and release to the Receiver such premises and the Fixtures located thereon in the same condition as at Ban Closing, normal wear and tear excepted. By failing to provide notice of its intention to vacate such premises prior to the expiration of the option period specified in Section 4.6( a), or by occupying such premises after the one hundred eighty (180)-day period specified above in this paragraph, the Assuming Ban shall, at the Receiver's option, (x) be deemed to . have assumed all leases, obligations and liabilities with respect to such premises (including any ground lease with respect to the land on which premises are located), and leased Furniture and Equipment and leased Fixtures located thereon in accordance with this Section 4.6 (unless the 15 Execution Copy Whole Bank P&A Washington Mutual Bank Henderson. Nevada Case 1:09-cv-01656-RMC Document 32-1 Filed 09/08/10 Page 27 of 52 Receiver previously repudiated any such lease), and (y) be required to purchase all Fixtures owned by the Failed Ban and located on such premises as of Ban Closing. (g) Omitted. 4.7 Agreement with Respect to Leased Data Processing Equipment (a) The Receiver hereby grants to the Assuming Ban an exclusive option for the period of ninety (90) days commencing the day after Ban Closing to accept an assignent from the Receiver of any or all Data Processing Leases to the extent that such Data Processing Leases can be assigned. (b) The Assuming Ban shall (i) give written notice to the Receiver within the option period specified in Section 4.7(a) of its intent to accept an assignent or sublease of any or all Data Processing Leases and promptly accept an assignent or sublease of such Data Processing Leases, and (ii) give written notice to the appropriate lessor(s) that it has accepted an assignent or sublease of any such Data Processing Leases. (c) The Receiver agrees to facilitate the assignent or sublease of Data Processing Leases or the negotiation of new leases or license agreements by the Assuming Ban; provided, that neither the Receiver nor the Corporation shall be obligated to engage in litigation or make payments to the Assuming Ban or to any third pary in connection with facilitating any such assumption, assignent, sublease or negotiation. (d) The Assuming Ban agrees, during its period of use of any property subject to a Data Processing Lease, to pay to the Receiver or to appropriate third paries at the direction of the Receiver all operating costs with respect thereto and to comply with all relevant terms of the applicable Data Processing Leases entered into by the Failed Ban, including without limitation the timely payment of all rent, taxes, fees, charges, utilities, insurance and assessments. (e) The Assuming Ban shall, not later than fifty (SO) days after giving the notice provided in Section 4.7(b), (i) relinquish and release to the Receiver all propert subject to the relevant Data Processing Lease, in the same condition as at Ban Closing, normal wear and tear excepted, or (ii) accept an assignent or a sublease thereof or negotiate a new lease or license agreement under this Section 4.7. 4.8 Agreement with Respect to Certain Existing Agreements. With respect to agreements existing as of Ban Closing which provide for the rendering of services by or to the Failed Ban, within one hundred twenty (120) days after Ban Closing, the Assuming Ban shall give the Receiver wrtten notice specifyng whether it elects to assume or not to assume each such agreement. Except as may be otherwise provided in this Aricle IV, the Assuming Ban agrees to comply with the terms of each such agreement for a period commencing on the day after Ban Closing and ending on: (i) in the case of an agreement that provides for the rendering of services by the Failed Ban, the date which is ninety (90) days after Ban Closing, and (ii) in the case of an agreement that provides for the rendering of services to 16 Washington Mutual Bank Henderson. Nevada Execution Copy Whole Bank P&A Case 1:09-cv-01656-RMC Document 32-1 Filed 09/08/10 Page 28 of 52 the Failed Bank, the date which is thirty (30) days after the Assuming Bank has given notice to the Receiver of its election not to assume such agreement; provided, that the Receiver can reasonably make such service agreements available to the Assuming Bank. The Assuming Ban shall be deemed by the Receiver to have assumed agreements for which no notification is timely given. The Receiver agrees to assign, transfer, convey, and deliver to the Assuming Ban all right, title and interest of the Receiver, if any, in and to agreements the Assuming Ban assumes hereunder. In the event the Assuming Bank elects not to accept an assignent of any lease (or sublease) or negotiate a new lease for leased Ban Premises under Section 4.6 and does not otherwise occupy such premises, the provisions of this Section 4.8 shall not apply to service agreements related to such premises. The Assuming Ban agrees, during the period it has the use or benefit of any such agreement, promptly to pay to the Receiver or to appropriate third paries at the direction of the Receiver all operating costs with respect thereto and to comply with all relevant terms of such agreement. This paragraph shall not apply with respect to deposit contracts which are expressly assumed by the Assuming Ban under Section 2.2 of this Agreement. 4.9 Informational Tax Reporting. The Assuming Ban agrees to perform all obligations of the Failed Ban with respect to Federal and State income tax informational reporting related to (i) the Assets and the Liabilities Assumed, (ii) deposit accounts that were closed and loans that were paid off or collateral obtained with respect thereto prior to Ban Closing, (iii) miscellaneous payments made to vendors of the Failed Ban, and (iv) any other asset or liabilty of the Failed Ban, including, without limitation, loans not purchased and Deposits not assumed by the Assuming Ban, as may be required by the Receiver. Under a private letter ruling (PLR) issued to the FDIC in Januar of 1988, the Internal Revenue Service will allow the Assuming Ban to report for the Failed Ban transactions under its own TIN for the entire year 2008; there is no need to dual-report for different payors in pre- v. post- closing date periods. The Assuming Ban agrees to prepare on behalf ofthe Receiver all required Federal and State compliance and income/franchise tax returns for the Failed Ban and acquired subsidiar entities as of Ban Closing. The returns wil be provided to the Receiver within the statutorily required fiing timeframe. 4.10 Insurance. The Assuming Ban agrees to obtain insurance coverage effective from and after Ban Closing, including public liability, fire and extended coverage insurance acceptable to the Receiver with respect to leased Ban Premises that it occupies, and all leased Furiture and Equipment and Fixtures and leased data processing equipment (including hardware and softare) located thereon, in the event such insurace coverage is not already in force and effect with respect to the Assuming Ban as the insured as of Ban Closing. All such insurance shall, where appropriate (as determined by the Receiver), name the Receiver as an additional insured. 4.11 Offce Space for Receiver and Corporation. For the period commencing on the day following Ban Closing and ending on the one hundred eightieth (180th) day thereafter, the Assuming Ban agrees to provide to the Receiver and the Corporation, without charge, adequate 17 Execution Copy Whole Bank P&A Washington Mutual Bank Henderson. Nevada Case 1:09-cv-01656-RMC Document 32-1 Filed 09/08/10 Page 29 of 52 and suitable offce space (including parking facilities and vault space), furniture, equipment (including photocopying and telecopying machines) and utilities (including local telephone service and a dedicated broadband or T -1 internet service) at the Bank Premises occupied by the Assuming Ban for their use in the discharge of their respective functions with respect to the Failed Ban. In the event the Receiver and the Corporation determine that the space provided is inadequate or unsuitable, the Receiver and the Corporation may relocate to other quarers having adequate and suitable space and the costs of relocation and any rental and utility costs for the balance of the period of occupancy by the Receiver and the Corporation shall be borne by the Assuming Ban. 4.12 Omitted. 4.13 Omitted. ARTICLE V DUTIES WITH RESPECT TO DEPOSITORS OF THE FAILED BANK 5.1 Payment of Checks. Drafts and Orders. Subject to Section 9.5, the Assuming Ban agrees to pay all properly drawn checks, drafts and withdrawal orders of depositors of the Failed Ban presented for payment, whether drawn on the check or draft forms provided by the Failed Ban or by the Assuming Ban, to the extent that the Deposit balances to the credit of the respective makers or drawers assumed by the Assuming Ban under this Agreement are suffcient to permit the payment thereof, and in all other respects to discharge, in the usual course of conducting a baning business, the duties and obligations of the Failed Ban with respect to the Depsit balances due and owing to the depositors of the Failed Ban assumed by the Assuming Ban under this Agreement. 5.2 Certain Agreements Related to Deposits. Subject to Section 2.2, the Assuming Ban agrees to honor the terms and conditions of any wrtten escrow or mortgage servicing agreement or other similar agreement relating to a Deposit liability assumed by the Assuming Ban pursuant to this Agreement. 5.3 Notice to Depositors. (a) Within thirty (30) days after Ban Closing, the Assuming Ban shall give (i) notice to depositors of the Failed Ban of its assumption of the Deposit liabilities of the Failed Ban, and (ii) any notice required under Section 2.2, by mailing to each such depositor a notice with respect to such assumption and by advertising in a newspaper of general circulation in the county or counties in which the Failed Ban was located. The Assuming Ban agrees that it wil obtain prior approval of all such notices and advertisements from counsel for the Receiver and that such notices and advertisements shall not be mailed or published until such approval is received. (b) The Assuming Ban shall give notice by mail to depositors of the Failed Ban concering the procedures to claim their deposits, which notice shall be provided to the 18 Washington Mutual Bank Henderson. Nevada Execution Copy Whole Bank P&A Case 1:09-cv-01656-RMC Document 32-1 Filed 09/08/10 Page 30 of 52 Assuming Ban by the Receiver or the Corporation. Such notice shall be included with the notice to depositors to be mailed by the Assuming Ban pursuant to Section 5.3(a). (c) If the Assuming Ban proposes to charge fees different from those charged by the Failed Ban before it establishes new deposit account relationships with the depositors of the Failed Ban, the Assuming Ban shall give notice by mail of such changed fees to such depositors. ARTICLE VI RECORDS 6.1 Transfer of Records. (a) In accordance with Section 3.1, the Receiver assigns, transfers, conveys and delivers to the Assuming Bank the following Records pertaining to the Deposit liabilities of the Failed Ban assumed by the Assuming Ban under this Agreement, except as provided in Section 6.4: (i) signature cards, orders, contracts between the Failed Ban and its depositors and Records of similar character; (ii) passbooks of depositors held by the Failed Ban, deposit slips, cancelled checks and withdrawal orders representing charges to accounts of depositors; and the following Records pertaining to the Assets: (iii) records of depsit balances carred with other bans, baners or trust companies; (iv) Loan and collateral records and Credit Files and other documents; (v) deeds, mortgages, abstracts, surveys, and other instruments or records of title pertaining to real estate or real estate mortgages; (vi) signature cards, agreements and records pertaining to Safe Deposit Boxes, if any; and (vii) records pertaining to the credit card business, trust business or safekeeping business of the Failed Ban, if any. (b) The Receiver, at its option, may assign and transfer to the Assuming Ban by a single blanet assignent or otherwise, as soon as practicable after Bank Closing, any other Records not assigned and transferred to the Assuming Bank as provided in this Agreement, including but not limited to loan disbursement checks, general ledger tickets, offcial ban checks, proof transactions (including proof tapes) and paid out loan fies. 19 Execution Copy Whole Bank P&A Washington Mutual Bank Henderon, Nevada Case 1:09-cv-01656-RMC Document 32-1 Filed 09/08/10 Page 31 of 52 6.2 Delivery of Assigned Records. The Receiver shall deliver to the Assuming Bank all Records described in (i) Section 6.1(a) as soon as practicable on or after the date of this Agreement, and (ii) Section 6.1 (b) as soon as practicable after making any assignent described therein. 6.3 Preservation of Records. The Assuming Bank agrees that it wil preserve and maintain for the joint benefit of the Receiver, the Corporation and the Assuming Ban, all Records of which it has custody for such period as either the Receiver or the Corporation in its discretion may require, until directed otherwise, in writing. by the Receiver or Corporation. The Assuming Ban shall have the primar responsibility to respond to subpoenas, discovery requests, and other similar official inquiries with respect to the Records of which it has custody. 6.4 Access to Records; Copies. The Assuming Ban agrees to permit the Receiver and the Corporation access to all Records of which the Assuming Ban has custody, and to use, inspect, make extracts from or request copies of any such Records in the maner and to the extent requested, and to duplicate, in the discretion of the Receiver or the Corporation, any Record in the form of microfilm or microfiche pertaining to Deposit account relationships; provided, that in the event that the Failed Ban maintained one or more duplicate copies of such microfim or microfiche Records, the Assuming Ban hereby assigns, transfers, and conveys to the Corporation one such duplicate copy of each such Record without cost to the Corporation, and agrees to deliver to the Corporation all Records assigned and transferred to the Corporation under this Aricle VI as soon as practicable on or after the date of this Agreement. The pary requesting a copy of any Record shall bear the cost (based on standard accepted industry charges to the extent applicable, as determined by the Receiver) for providing such duplicate Records. A copy of each Record requested shall be provided as soon as practicable by the pary having custody thereof. ARTICLE VII BID; INITIAL PAYMENT The Assuming Ban has submitted to the Receiver a positive bid of $1,888,000,000.00 for the Assets purchased and Liabilities Assumed hereunder (the "Bid Amount"). On the Payment Date, the Assuming Ban wil pay to the Corporation, or the Corporation wil pay to the Assuming Ban, as the case may be, the Initial Payment, together with interest on such amount (if the Payment Date is not the day following the day of Ban Closing) from and including the day following Ban Closing to and including the day preceding the Payment Date at the Settlement Interest Rate. ARTICLE VIII PROFORMA 20 Execution Copy Whole Bank P&A Washington Mutual Bank Hendersn. Nevada Case 1:09-cv-01656-RMC Document 32-1 Filed 09/08/10 Page 32 of 52 The Assuming Bank, as soon as practical after Bank Closing, in accordance with the best information then available, shall provide to the Receiver a Proforma Statement of Condition indicating all assets and liabilities of the Failed Bank as shown on the Failed Ban's books and records as of Ban Closing and reflecting which assets and liabilities are passing to the Assuming Ban and which assets and liabilities are to be retained by the Receiver. In addition, the Assuming Ban is to provide to the Receiver, in a standard data request as defined by the Receiver, an electronic database of all loans, deposits, and subsidiares and other business combinations owned by the Failed Bank as of Bank Closing. See Schedule 3.1 a. ARTICLE IX CONTINUING COOPERATION 9.1 General Matters. The paries hereto agree that they will, in good faith and with their best efforts, cooperate with each other to car out the transactions contemplated by this Agreement and to effect the purposes hereof. 9.2 Additional Title Documents. The Receiver, the Corporation and the Assuming Ban each agree, at any time, and from time to time, upon the request of any pary hereto, to execute and deliver such additional instruments and documents of conveyance as shall be reasonably necessar to vest in the appropriate pary its full legal or equitable title in and to the propert transferred pursuant to this Agreement or to be transferred in accordance herewith. The Assuming Ban shall prepare such instruments and documents of conveyance (in form and substance satisfactory to the Receiver) as shall be necessar to vest title to the Assets in the Assuming Ban. The Assuming Ban shall be responsible for recording such instrments and documents of conveyance at its own expense. 9.3 Claims and Suits. (a) The Receiver shall have the right, in its discretion, to (i) defend or settle any claim or suit against the Assuming Ban with respect to which the Receiver has indemnified the Assuming Ban in the same maner and to the same extent as provided in Aricle Xli, and (ii) defend or settle any claim or suit against the Assuming Ban with respect to any Liability Assumed, which claim or suit may result in a loss to the Receiver arsing out of or related to this Agreement, or which existed against the Failed Ban on or before Ban Closing. The exercise by the Receiver of any rights under this Section 9.3(a) shall not release the Assuming Ban with respect to any of its obligations under this Agreement. (b) In the event any action at law or in equity shall be instituted by any Person against the Receiver and the Corporation as codefendants with respect to any asset of the Failed Ban retained or acquired pursuant to this Agreement by the Receiver, the Receiver agrees, at the request of the Corpration, to join with the Corporation in a petition to remove the action to the United States District Court for the proper district. The Receiver agrees to institute, with or without joinder of the Corporation as coplaintiff, any action with respect to any such retained or acquired asset or any matter connected therewith whenever notice requiring such action shall be given by the Corporation to the Receiver. 21 Execution Copy Whole Bank P&A Washington Mutual Bank Henderson, Nevada Case 1:09-cv-01656-RMC Document 32-1 Filed 09/08/10 Page 33 of 52 9.4 Payment of Deposits. In the event any depositor does not accept the obligation of the Assuming Bank to pay any Deposit liability of the Failed Bank assumed by the Assuming Ban pursuant to this Agreement and asserts a claim against the Receiver for all or any portion of any such Deposit liability, the Assuming Ban agrees on demand to provide to the Receiver funds suffcient to pay such claim in an amount not in excess of the Deposit liability reflected on the books of the Assuming Bank at the time such claim is made. Upon payment by the Assuming Ban to the Receiver of such amount, the Assuming Ban shall be discharged from any further obligation under this Agreement to pay to any such depositor the amount of such Deposit liability paid to the Receiver. 9.5 Withheld Payments. At any time, the Receiver or the Corporation may, in its discretion, determine that all or any portion of any deposit balance assumed by the Assuming Ban pursuant to this Agreement does not constitute a "Deposit" (or otherwise, in its discretion, determine that it is the best interest of the Receiver or Corporation to withhold all or any portion of any deposit), and may direct the Assuming Ban to withhold payment of all or any portion of any such deposit balance. Upon such direction, the Assuming Ban agrees to hold such deposit and not to make any payment of such deposit balance to or on behalf of the depositor, or to itself, whether by way of transfer, set-off, or otherwise. The Assuming Ban agrees to maintain the "withheld payment" status of any such deposit balance until directed in writing by the Receiver or the Corporation as to its disposition. At the direction of the Receiver or the Corporation, the Assuming Ban shall return all or any portion of such deposit balance to the Receiver or the Corporation, as appropriate, and thereupon the Assuming Ban shall be discharged from any fuer liability to such depositor with respect to such returned deposit balance. If such deposit balance has been paid to the depositor prior to a demand for return by the Corporation or the Receiver, and payment of such deposit balance had not been previously withheld pursuant to this Section, the Assuming Ban shall not be obligated to return such deposit balance to the Receiver or the Corporation. The Assuming Ban shall be obligated to reimbure the Corporation or the Receiver, as the case may be, for the amount of any deposit balance or portion thereof paid by the Assuming Ban in contravention of any previous direction to withold payment of such deposit balance or return such deposit balance the payment of which was withheld pursuant to this Section. 9.6 Proceedings with Respect to Certain Assets and Liabilties. (a) In connection with any investigation, proceeding or other matter with respect to any asset or liability of the Failed Ban retained by the Receiver, or any asset of the Failed Ban acquired by the Receiver pursuant to this Agreement, the Assuming Ban shall cooperate to the extent reasonably required by the Receiver. (b) In addition to its obligations under Section 6.4, the Assuming Ban shall provide representatives of the Receiver access at reasonable times and locations without other limitation or qualification to (i) its directors, offcers, employees and agents and those of the Subsidiares acquired by the Assuming Ban, and (ii) its books and records, the books and records of such Subsidiares and all Credit Files, and copies thereof. Copies of books, records and Credit Files 22 Washington Mutual Bank Henderon. Nevada Execution Copy Whole Bank P&A Case 1:09-cv-01656-RMC Document 32-1 Filed 09/08/10 Page 34 of 52 shall be provided by the Assuming Bank as requested by the Receiver and the costs of duplication thereof shall be borne by the Receiver. (c) Not later than ten (10) days after the Put Notice pursuant to Section 3.4 or the date of the notice of transfer of any Loan by the Assuming Bank to the Receiver pursuant to Section 3.6, the Assuming Bank shall deliver to the Receiver such documents with respect to such Loan as the Receiver may request, including without limitation the following: (i) all related Credit Documents (other than certificates, notices and other ancillar documents), (ii) a certificate setting forth the principal amount on the date of the transfer and the amount of interest, fees and other charges then accrued and unpaid thereon, and any restrictions on transfer to which any such Loan is subject, and (iii) all Credit Files, and all documents, microfiche, microfim and computer records (including but not limited to magnetic tape, disc storage, card forms and printed copy) maintained by, owned by, or in the possession of the Assuming Ban or any Affliate of the Assuming Ban relating to the transferred Loan. 9.7 Information. The Assuming Ban promptly shall provide to the Corporation such other information, including financial statements and computations, relating to the performance of the provisions ofthis Agreement as the Corporation or the Receiver may request from time to time, and, at the request of the Receiver, make available employees of the Failed Ban employed or retained by the Assuming Ban to assist in preparation of the pro forma statement pursuant to Section 8.1. ARTICLE X CONDITION PRECEDENT The obligations of the paries to this Agreement are subject to the Receiver and the Corporation having received at or before Ban Closing evidence reasonably satisfactory to each of any necessar approval, waiver, or other action by any governental authority, the board of directors of the Assuming Ban, or other third pary, with respect to this Agreement and the transactions contemplated hereby, the closing ofthe Failed Ban and the appointment of the Receiver, the charering of the Assuming Ban, and any agreements, documents, matters or proceedings contemplated hereby or thereby. ARTICLE XI REPRESENTATIONS AND WARRTIES OF THE ASSUMING BANK The Assuming Ban represents and warants to the Corporation and the Receiver as follows: (a) Corporate Existence and Authority. The Assuming Ban (i) is duly organized, validly existing and in good standing under the laws of its Charering Authority and has full power and authority to own and operate its properties and to conduct its business as now conducted by it, and (ii) has full power and authority to execute and deliver this Agreement and to perform its obligations hereunder. The Assuming Bank has taken all necessar corporate 23 Washington Mutual Bank Henderson. Nevada Execution Copy Whole Bank P&A Case 1:09-cv-01656-RMC Document 32-1 Filed 09/08/10 Page 35 of 52 action to authorize the execution, delivery and performance of this Agreement and the performance of the transactions contemplated hereby. (b) Third Party Consents. No governental authority or other third pary consents (including but not limited to approvals, licenses, registrations or declarations) are required in connection with the execution, delivery or performance by the Assuming Ban of this Agreement, other than such consents as have been duly obtained and are in full force and effect. (c) Execution and Enforceabilty. This Agreement has been duly executed and delivered by the Assuming Ban and when this Agreement has been duly authorized, executed and delivered by the Corporation and the Receiver, this Agreement wil constitute the legal, valid and binding obligation of the Assuming Ban, enforceable in accordance with its terms. (d) Compliance with Law. (i) Neither the Assuming Ban nor any of its Subsidiares is in violation of any statute, regulation, order, decision, judgment or decree of, or any restnction imposed by, the United States of America, any State, municipality or other political subdivision or any agency of any of the foregoing, or any court or other tribunal having jurisdiction over the Assuming Ban or any of its Subsidiares or any assets of any such Person, or any foreign governent or agency thereof having such jurisdiction, with respect to the conduct of the business of the Assuming Ban or of any of its Subsidiares, or the ownership ofthe properties of the Assuming Ban or any of its Subsidiares, which, either individually or in the aggregate with all other such violations, would materially and adversely affect the business, operations or condition (financial or otherwise) of the Assuming Ban or the ability of the Assuming Ban to perform, satisfy or obsere any obligation or condition under this Agreement. (ii) Neither the execution and delivery nor the performance by the Assuming Ban of this Agreement wil result in any violation by the Assuming Ban of, or be in conflict with, any provision of any applicable law or regulation, or any order, wrt or decree of any court or governental authority. e) Representations Remain True. The Assuming Ban represents and warants that it has executed and delivered to the Corporation a Purchaser Eligibility Certification and Confidentiality Agreement and that all information provided and representations made by or on behalf of the Assuming Ban in connection with this Agreement and the transactions contemplated hereby, including, but not limited to, the Purchaser Eligibility Certification and Confidentiality Agreement (which are affrmed and ratified hereby) are and remain true and correct in all material respects and do not fail to state any fact required to make the information contained therein not misleading. ARTICLE XII INDEMNIFICATION 24 Execution Copy Whole Bank P&A Washington Mutual Bank Hendern, Nevada Case 1:09-cv-01656-RMC Document 32-1 Filed 09/08/10 Page 36 of 52 12.1 Indemnification of Indemnitees. From and after Ban Closing and subject to the limitations set forth in this Section and Section 12.6 and compliance by the Indemnitees with Section 12.2, the Receiver agrees to indemnify and hold harmless the Indemnitees against any and all costs, losses, liabilities, expenses (including attorneys' fees) incurred prior to the assumption of defense by the Receiver pursuant to paragraph (d) of Section 12.2, judgments, fines and amounts paid in settlement actually and reasonably incurred in connection with claims against any Indemnitee (1) based on liabilities of the Failed Ban that are not assumed by the Assuming Ban pursuant to this Agreement or subsequent to the execution hereof by the Assuming Bank or any Subsidiar or Affiliate of the Assuming Ban for which indemnification is provided hereunder in (a) of this Section 12.1 or (2) described in Section 12.1(a) below subject in each case to certain exclusions as provided in (b) ofthis Section 12.1: (a) (1) claims based on the rights of any shareholder or former shareholder as such of (x) the Failed Ban, or (y) any Subsidiar or Affliate of the Failed Ban; (2) claims based on the rights of any creditor as such of the Failed Ban, or any creditor as such of any director, offcer, employee or agent of the Failed Ban or any Affliate of the Failed Ban, with respect to any indebtedness or other obligation ofthe Failed Ban or any Affliate of the Failed Ban arsing prior to Ban Closing; (3) claims based on the rights of any present or former director, offcer, employee or agent as such of the Failed Ban or of any Subsidiar or Affliate of the Failed Ban; (4) claims based on any action or inaction prior to Ban Closing of the Failed Ban, its directors, offcers, employees or agents as such, or any Subsidiar or Affliate of the Failed Bank, or the directors, offcers, employees or agents as such of such Subsidiar or Affliate; (5) claims based on any malfeasance, misfeasance or nonfeasce of the Failed Ban, its directors, offcers, employees or agents with respect to the trust business ofthe Failed Ban, ifany; (6) claims based on any failure or alleged failure (not in violation oflaw) by the Assuming Ban to continue to perform any service or activity previously performed by the Failed Ban which the Assuming Ban is not required to perform pursuant to this Agreement or which arse under any contract to which the Failed Ban was a pary which the Assuming Ban elected not to assume in accordance with this Agreement and which neither the Assuming Ban nor any Subsidiar or Affliate of the Assuming Ban has assumed subsequent to the execution hereof; (7) claims arsing from any action or inaction of any Indemnitee, including for purposes of this Section 12.1(a)(7) the former offcers or employees of the Failed Ban or of any Subsidiar or Affliate of the Failed Ban that is taken upon the specific wrtten direction of the Corpration or the Receiver, other than any action or inaction taken in a maner constituting bad faith, gross negligence or wilful misconduct; and 25 E"ecution Copy Whole Bank P&A Washington Mutual Bank Henderson, Nevada Case 1:09-cv-01656-RMC Document 32-1 Filed 09/08/10 Page 37 of 52 (8) claims based on the rights of any depositor of the Failed Bank whose deposit has been accorded "withheld payment" status and/or returned to the Receiver or Corporation in accordance with Section 9.5 and/or has become an "unclaimed deposit" or has been returned to the Corporation or the Receiver in accordance with Section 2.3; (9) claims asserted by, or derivatively by any shareholder on behalf of, the Failed Bank's parent company based on the process of bidding, negotiation, execution and consummation of the transactions contemplated by this Agreement, provided that (x) the amount of the indemnification paid or payable pursuant to this clause (9) shall not exceed $500,000,000, and (y) the indemnification provided by this clause (9) shall cover only those claims specifically enumerated in the FDIC's approval of the transactions contemplated by this Agreement. (b) provided, that, with respect to this Agreement, except for paragraphs (7), (8) and (9) of Section 12.1 (a), no indemnification will be provided under this Agreement for any: (1) judgment or fine against, or any amount paid in settlement (without the written approval of the Receiver) by, any Indemnitee in connection with any action that seeks damages against any Indemnitee (a "counterclaim") arsing with respect to any Asset and based on any action or inaction of either the Failed Ban, its directors, offcers, employees or agents as such prior to Ban Closing, unless any such judgment, fine or amount paid in settlement exceeds the greater of (i) the Repurchase Price of such Asset, or (ii) the monetar recovery sought on such Asset by the Assuming Bank in the cause of action from which the counterclaim arses; and in such event the Receiver will provide indemnification only in the amount of such excess; and no indemnification wil be provided for any costs or expenses other than any costs or expenses (including attorneys' fees) which, in the determination of the Receiver, have been actually and reasnably incurred by such Indemnitee in connection with the defense of any such counterclaim; and it is expressly agreed that the Receiver reserves the right to intervene, in its discretion, on its behalf and/or on behalf of the Receiver, in the defense of any such counterclaim; (2) claims with respect to any liability or obligation of the Failed Ban that is expressly assumed by the Assuming Ban pursuant to this Agreement or subsequent to the execution hereof by the Assuming Ban or any Subsidiar or Affliate of the Assuming Ban; (3) claims with respect to any liability of the Failed Ban to any present or former employee as such of the Failed Ban or of any Subsidiar or Affiiate of the Failed Ban, which liability is expressly assumed by the Assuming Ban pursuant to this Agreement or subsequent to the execution hereof by the Assuming Ban or any Subsidiar or Affliate ofthe Assuming Ban; (4) claims based on the failure of any Indemnitee to seek recovery of damages from the Receiver for any claims based upon any action or inaction of the Failed Ban, its directors, offcers, employees or agents as fiduciar, agent or custodian prior to Ban Closing; (5) claims based on any violation or alleged violation by any Indemnitee of the antitrst, branching, baning or ban holding company or securities laws of the United States of America or any State thereof; 26 Execution Copy Whole Bank P&A Washington Mutual Bank Henderson, Nevada Case 1:09-cv-01656-RMC Document 32-1 Filed 09/08/10 Page 38 of 52 . (6) claims based on the rights of any present or former creditor, customer, or supplier as such of the Assuming Ban or any Subsidiary or Affiliate of the Assuming Ban; (7) claims based on the rights of any present or former shareholder as such of the Assuming Ban or any Subsidiar or Affliate of the Assuming Ban regardless of whether any such present or former shareholder is also a present or former shareholder of the Failed Bank; (8) claims, if the Receiver determines that the effect of providing such indemnification would be to (i) expand or alter the provisions of any waranty or disclaimer thereof provided in Section 3.3 or any other provision ofthis Agreement, or (ii) create any waranty not expressly provided under this Agreement; (9) claims which could have been enforced against any Indemnitee had the Assuming Bank not entered into this Agreement; (10) claims based on any liability for taxes or fees assessed with respect to the consummation of the transactions contemplated by this Agreement, including without limitation any subsequent transfer of any Assets or Liabilities Assumed to any Subsidiar or Affliate of the Assuming Ban; (11) except as expressly provided in this Aricle XII, claims based on any action or inaction of any Indemnitee, and nothing in this Agreement shall be construed to provide indemnification for (i) the Failed Ban, (ii) any Subsidiar or Affiiate of the Failed Ban, or (iii) any present or former director, offcer, employee or agent of the Failed Ban or its Subsidiares or Affliates; provided, that the Receiver, in its discretion, may provide indemnification hereunder for any present or former director, offcer, employee or agent of the Failed Ban or its Subsidiares or Affliates who is also or becomes a director, offcer, employee or agent ofthe Assuming Ban or its Subsidiares or Affliates; (12) claims or actions which constitute a breach by the Assuming Bank of the representations and waranties contained in Aricle XI; (13) claims arsing out of or relating to the condition of or generated by an Asset arsing from or relating to the presence, storage or release of any hazardous or toxic substance, or any pollutant or contaminant, or condition of such Asset which violate any applicable Federal, State or local law or regulation concerning environmental protection; (14) claims based on, related to or arsing from any asset, including a loan, acquired or liability assumed by the Assuming Ban, other than pursuant to this Agreement; and (15) claims based on, related to or arsing from any liability specifically not assumed by the Assuming Ban pursuant to Section 2.5 ofthis Agreement. 12.2 Conditions Precedent to Indemnifcation. It shall be a condition precedent to the obligation of the Receiver to indemnify any Person pursuant to this Aricle XII that such 27 Execution Copy Whole Bank P&A Washington Mutual Bank Henderon. Nevada Case 1:09-cv-01656-RMC Document 32-1 Filed 09/08/10 Page 39 of 52 Person shall, with respect to any claim made or threatened against such Person for which such Person is or may be entitled to indemnification hereunder: (a) give written notice to the Regional Counsel (Litigation Branch) of the Corporation in the maner and at the address provided in Section 13.7 of such claim as soon as practicable after such claim is made or threatened; provided, that notice must be given on or before the date which is six (6) years from the date of this Agreement; (b) provide to the Receiver such information and cooperation with respect to such claim as the Receiver may reasonably require; (c) cooperate and take all steps, as the Receiver may reasonably require, to preserve and protect any defense to such claim; (d) in the event suit is brought with respect to such claim, upon reasonable prior notice, afford to the Receiver the right, which the Receiver may exercise in its sole discretion, to conduct the investigation, control the defense and effect settlement of such claim, including without limitation the right to designate counsel and to control all negotiations, litigation, arbitration, settlements, compromises and appeals of any such claim, all of which shall be at the expense of the Receiver; provided, that the Receiver shall have notified the Person claiming indemnification in wrting that such claim is a claim with respect to which the Person claiming indemnification is entitled to indemnification under this Aricle XII; (e) not incur any costs or expenses in connection with any response or suit with respect to such claim, unless such costs or expenses were incurred upon the written direction of the Receiver; provided, that the Receiver shall not be obligated to reimbure the amount of any such costs or expenses unless such costs or expenses were incurred upon the written direction of the Receiver; (f) not release or settle such claim or make any payment or admission with respect thereto, unless the Receiver consents in writing thereto, which consent shall not be unreasonably witheld; provided, that the Receiver shall not be obligated to reimburse the amount of any such settlement or payment unless such settlement or payment was effected upon the written direction of the Receiver; and (g) take reasonable action as the Receiver may request in writing as necessar to preserve, protect or enforce the rights of the indemnified Person against any Primar Indemnitor. 12.3 No Additional Warranty. Nothing in this Aricle XII shall be construed or deemed to (i) expand or otherwise alter any waranty or disclaimer thereof provided under Section 3.3 or any other provision of this Agreement with respect to, among other matters, the title, value, collectibility, genuineness, enforceability or condition of any (x) Asset, or (y) asset of the Failed Ban purchased by the Assuming Ban subsequent to the execution of this Agreement by the Assuming Ban or any Subsidiar or Affliate of the Assuming Ban, or (ii) create any waranty not expressly provided under this Agreement with respect thereto. 28 Execution Copy Whole Bank P&A Washington Mutual Bank Henderson, Nevada Case 1:09-cv-01656-RMC Document 32-1 Filed 09/08/10 Page 40 of 52 12.4 Indemnification of Receiver and Corporation. From and after Ban Closing, the Assuming Ban agrees to indemnify and hold harmless the Corporation and the Receiver and their respective directors, offcers, employees and agents from and against any and all costs, losses, liabilities, expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred in connection with any of the following: (a) claims based on any and all liabilities or obligations of the Failed Ban assumed by the Assuming Bank pursuant to this Agreement or subsequent to the execution hereof by the Assuming Ban or any Subsidiar or Affiliate of the Assuming Ban, whether or not any such liabilities subsequently are sold and/or transferred, other than any claim based upon any action or inaction of any Indemnitee as provided in paragraph (7) or (8) of Section 12.1(a); and (b) claims based on any act or omission of any Indemnitee (including but not limited to claims of any Person claiming any right or title by or through the Assuming Ban with respect to Assets transferred to the Receiver pursuant to Section 3.4 or 3.6), other than any action or inaction of any Indemnitee as provided in paragraph (7) or (8) of Section 12.1 (a). 12.5 Obligations Supplemental. The obligations of the Receiver, and the Corporation as guarantor in accordance with Section 12.7, to provide indemnification under this Aricle XII ar to supplement any amount payable by any Primar Indemnitor to the Person indemnified under this Aricle XII. Consistent with that intent, the Receiver agrees only to make payments pursuant to such indemnification to the extent not payable by a Primar Indemnitor. If the aggregate amount of payments by the Receiver, or the Corporation as guarantor in accordance with Section 12.7, and all Primar Indemnitors with respect to any item of indemnification under this Aricle XII exceeds the amount payable with respect to such item, such Person being indemnified shall notify the Receiver thereof and, upon the request ofthe Receiver, shall promptly pay to the Receiver, or the Corporation as appropriate, the amount of the Receiver's (or Corporation's) payments to the extent of such excess. 12.6 Criminal Claims. Notwithstanding any provision of this Aricle XII to the contr, in the event that any Person being indemnified under this Aricle XII shall become involved in any criminal action, suit or proceeding, whether judicial, administrative or investigative, the Receiver shall have no obligation hereunder to indemnify such Person for liability with respect to any criminal act or to the extent any costs or expenses are attributable to the defense against the allegation of any criminal act, unless (i) the Person is successful on the merits or otherwise in the defense against any such action, suit or proceeding, or (ii) such action, suit or proceeding is terminated without the imposition of liability on such Person. 12.7 Limited Guaranty ofthe Corporation. The Corporation hereby guarantees performance of the Receiver's obligation to indemnify the Assuming Ban as set forth in this Aricle XII. It is a condition to the Corporation's obligation hereunder that the Assuming Ban shall comply in all respects with the applicable provisions of this Aricle XII. The Corporation shall be liable hereunder only for such amounts, if any, as the Receiver is obligated to pay under the terms of this Aricle XII but shall fail to pay. Except as otherwise provided above in this Section 12.7, nothing in this Aricle XII is intended or shall be construed to create any liability or obligation on the par of the Corporation, the United States of America or any deparent or 29 Execution Copy Whole Bank P&A Washington Mutual Bank Henderon. Nevada Case 1:09-cv-01656-RMC Document 32-1 Filed 09/08/10 Page 41 of 52 agency thereof under or with respect to this Aricle XLI, or any provision hereof, it being the intention of the paries hereto that the obligations undertaken by the Receiver under this Aricle XII are the sole and exclusive responsibility of the Receiver and no other Person or entity. 12.8 Subrogation. Upon payment by the Receiver, or the Corporation as guarantor in accordance with Section 12.7, to any Indemnitee for any claims indemnified by the Receiver under this Aricle XII, the Receiver, or the Corporation as appropriate, shall become subrogated to all rights of the Indemnitee against any other Person to the extent of such payment. ARTICLE XIII MISCELLANEOUS 13.1 Entire Agreement. This Agreement embodies the entire agreement of the paries hereto in relation to the subject matter herein and supersedes all prior understandings or agreements, oral or written, between the paries. 13.2 Headings. The headings and subheadings of the Table of Contents, Aricles and Sections contained in this Agreement, except the terms identified for definition in Aricle I and elsewhere in this Agreement, are inserted for convenience only and shall not affect the meaning or interpretation of this Agreement or any provision hereof. 13.3 Counterparts. This Agreement may be executed in any number of counterpars and by the duly authorized representative of a different party hereto on separte counterars, each of which when so executed shall be deemed to be an original and all of which when taen together shall constitute one and the same Agreement. 13.4 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AN OBLIGATIONS HEREUNER SHALL BE GOVERNED BY AN CONSTRUED IN ACCORDANCE WITH THE FEDERA LAW OF THE UNTED STATES OF AMERICA, AN IN THE ABSENCE OF CONTROLLING FEDERAL LAW, IN ACCORDANCE WITH THE LAWS OF THE STATE IN WHICH THE MAIN OFFICE OF THE FAIED BAN IS LOCATED. 13.5 Successors. All terms and conditions of this Agreement shall be binding on the successors and assigns of the Receiver, the Corporation and the Assuming Ban. Except as otherwise specifically provided in this Agreement, nothing expressed or referred to in this Agreement is intended or shall be constred to give any Person other than the Receiver, the Corporation and the Assuming Ban any legal or equitable right, remedy or claim under or with respect to this Agreement or any provisions contained herein, it being the intention of the paries hereto that this Agreement, the obligations and statements of responsibilties hereunder, and all other conditions and provisions hereof are for the sole and exclusive benefit of the Receiver, the Corporation and the Assuming Ban and for the benefit of no other Person. 30 Washington Mutual Bank Henderson, Nevada Execution Copy Whole Bank P&A Case 1:09-cv-01656-RMC Document 32-1 Filed 09/08/10 Page 42 of 52 13.6 Modification; Assignment. No amendment or other modification, rescission, release, or assignment of any par of this Agreement shall be effective except pursuant to a wrtten agreement subscribed by the duly authorized representatives of the parties hereto. 13.7 Notice. Any notice, request, demand, consent, approval or other communication to any party hereto shall be effective when received and shall be given in writing, and delivered in person against receipt therefore, or sent by certified mail, postage prepaid, courier service, telex or facsimile transmission to such pary (with copies as indicated below) at its address set forth below or at such other address as it shall hereafter furnish in writing to the other paries. All such notices and other communications shall be deemed given on the date received by the addressee. Assuming Bank JPMorgan Chase Ban, National Association 270 Park Avenue New York, New York 10017 Attention: Brian A. Bessey with a copy to: Stephen M. Cutler Receiver and Corporation Federal Deposit Insurance Corporation, Receiver of Washington Mutual Ban, Henderson, Nevada 1601 Bryan St., Suite 1700 Dallas, Texas 75201 Attention: Deputy Director (DRR-Field Operations Branch) with copy to: Regional Counsel (Litigation Branch) and with respect to notice under Article XII: Federal Depsit Insurance Corporation Receiver of Washington Mutual Ban, Henderson, Nevada 1601 Bryan St., Suite 1700 Dallas, Texas 75201 Attention: Regional Counsel (Litigation Branch) 13.8 Manner of Payment. All payments due under this Agreement shall be in lawful money of the United States of America in immediately available funds as each pary hereto may specify to the other paries; provided, that in the event the Receiver or the Corporation is obligated to make any payment hereunder in the amount of $25,000.00 or less, such payment may be made by check. 31 Washington Mutual Bank Hender. Nevada Execution Copy Whole Bank P&A Case 1:09-cv-01656-RMC Document 32-1 Filed 09/08/10 Page 43 of 52 13.9 Costs, Fees and Expenses. Except as otherwise specifically provided herein, each pary hereto agrees to pay all costs, fees and expenses which it has incurred in connection with or incidental to the matters contained in this Agreement, including without limitation any fees and disbursements to its accountants and counsel; provided, that the Assuming Ban shall pay all fees, costs and expenses (other than attorneys' fees incurred by the Receiver) incurred in connection with the transfer to it of any Assets or Liabilities Assumed hereunder or in accordance herewith. 13.10 Waiver. Each of the Receiver, the Corporation and the Assuming Ban may waive its respective rights, powers or privileges under this Agreement; provided, that such waiver shall be in writing; and further provided, that no failure or delay on the par of the Receiver, the Corporation or the Assuming Ban to exercise any right, power or privilege under this Agreement shall operate as a waiver thereof, nor will any single or parial exercise of any right, power or privilege under this Agreement preclude any other or further exercise thereof or the exercise of any other right, power or privilege by the Receiver, the Corporation, or the Assuming Ban under this Agreement, nor wil any such waiver operate or be construed as a future waiver of such right, power or privilege under this Agreement. 13.11 Severabilty. If any provision of this Agreement is declared invalid or unenforceable, then, to the extent possible, all of the remaining provisions of this Agreement shall remain in full force and effect and shall be binding upon the paries hereto. 13.12 Term of Agreement. This Agreement shall continue in full force and effect until the sixth (6th) anniversar of Ban Closing; provided, that the provisions of Section 6.3 and 6.4 shall survive the expiration of the term ofthis Agreement. Provided, however, the receivership of the Failed Ban may be terminated prior to the expiration of the term of this Agreement; in such event, the guaranty of the Corporation, as provided in and in accordance with the provisions of Section 12.7 shall be in effect for the remainder of the term. Expiration of the term of this Agreement shall not affect any claim or liability of any pary with respect to any (i) amount which is owing at the time of such expiration, regardless of when such amount becomes payable, and (ii) breach ofthis Agreement occurrng prior to such expiration, regardless of when such breach is discovered. 13.13 Survival of Covenants, Etc. The covenants, representations, and waranties in this Agreement shall survive the execution of this Agreement and the consummation of the transactions contemplated hereunder. (Signature Page Follows) 32 Execution Copy Whole Bank P&A Washington Mutual Bank Hendersn. Nevada Case 1:09-cv-01656-RMC Document 32-1 Filed 09/08/10 Page 44 of 52 IN WITNESS WHEREOF, the paries hereto have caused this Agreement to be executed by their duly authorized representatives as of the date first above wrttn. FEDERA DEPOSIT INSURACE CORPORATION, RECEIVER OF: WASHINGTON MUTUAL BANK, HENDERSON, NEVADA BY: NAME: Mitchcll L. Glassman TITLE: Director Attest: FEDERAL DEPOSIT INSURANCE CORPORATION BY: NAM: Mitchell L. Olassman TITLE: Director Attest: JPMORGAN CHASE BANK, NATIONAL ASSOCI ON NAMF.: Rrian A. Re!\!\ey TITLE: Senior Vice President BY: Attest: , - ~ if\ltJ t i1 'JL 33 Execution Copy Whole Bank P.lA Washingtoii Mutual Bank Hendmoii. Nevda Case 1:09-cv-01656-RMC Document 32-1 Filed 09/08/10 Page 45 of 52 IN WITNESS WHEREOF, the paries hereto have caused this Agreement to be executed by their duly authorized representatives as of the date first above written. FEDERA DEPOSIT INSURACE CORPORATION, RECEIVER OF: WASHINGTON MUTUAL BANK, HENDERSON, NEVADA BY~~~ NAME: Mitchell L. Glassman TITLE: Director Attest: hiJ$u FEDERA DEPOSIT INSURACE CORPORATION BY:~~ NAME: Mitchell L. Glassman TITLE: Director ~)~ JPMORGAN CHASE BANK, NATIONAL ASSOCIATION BY: NAME: Brian A. Bessey TITLE: Senior Vice President Attest: 33 Execution Copy Whole Bank P&A Washington Mutual Bank Henderson. Nevada Case 1:09-cv-01656-RMC Document 32-1 Filed 09/08/10 Page 46 of 52 SCHEDULE 2.1 - Certain Liabilties Not Assumed 1. Preferred stock and litigation pending against the Failed Bank related to liabilities retained by the receiver. 2. Subordinated debt. 3. Senior debt. 4. All employee benefit plans sponsored by the holding company of the Failed Ban except the tax-qualified pension and 401(k) plans and employee medical plan. 5. All management, employment, change-in-control, severance, unfunded deferred compensation and individual consulting agreements or plans (i) between the Failed Ban and its employees or (ii) maintained by the Failed Ban on behalf of its employees. 34 Execution Copy Whole Bank P&A Washington Mutual Bank Henderon, Nevada Case 1:09-cv-01656-RMC Document 32-1 Filed 09/08/10 Page 47 of 52 SCHEDULE 3.2 - Purchase Price of Assets (a) cash and receivables from depository Book Value institutions, including cash items in the process of collection, plus interest thereon: (b) securities (exclusive of the capital stock of Market Value Acquired Subsidiares), plus interest thereon: (c) federal funds sold and repurchase Book Value agreements, if any, including interest thereon: (d) Loans: Book Value (e) Other Real Estate: Book Value (f) credit card business, if any, including all Book Value outstanding extensions of credit: (g) Safe Deposit Boxes and related business, safekeeping business and trust business, if Book Value any: (h) Records and other documents: Book Value (i) capital stock of any Acquired Subsidiares: Book Value (j) amounts owed to the Failed Ban by any Book Value Acquired Subsidiar: (k) assets securing Deposits of public money, Book Value to the extent not otherwise purchased hereunder: (1) Overdrafts of customers: Book Value 35 Execution Copy Whole Bank P&A Washington Mutual Bank Henderson, Nevada Case 1:09-cv-01656-RMC Document 32-1 Filed 09/08/10 Page 48 of 52 (m) rights, if any, with respect to Qualified Market Value Financial Contracts. (n) rights of the Failed Ban to provide Book Value mortgage servicing for others and to have mortgage servicing provided to the Failed Ban by others and related contracts. (0) Ban Premises: Book Value (p) Furniture and Equipment: Book Value (q) Fixtures: Book Value 36 Execution Copy Whle Bank P&A Washington Mutual Bank Henderson, Nevada Case 1:09-cv-01656-RMC Document 32-1 Filed 09/08/10 Page 49 of 52 SCHEDULE 3.5 - Certain Assets Not Purchased (1) Any Financial Institution Bonds, Baner's Blanet Bonds, surety bonds (except Court bonds required for retained litigation risk), Directors and Offcers insurance, Professional Liability insurance, or related premium refund, uneared premium derived from cancellation, or any proceeds payable with respect to any of the foregoing. This shall exclude Commercial General Liability, International Liability, Commercial Automobile, Worker's Compensation, Employer's Liability, Umbrella and Excess Liability, Property, Mortgage Impairment and Mortgage Errors & Omissions, Lender-placed coverage, Private Mortgage Insurance, Boiler & Machinery, Terrorism, Mail, Storage Tan Liability, Marne Liability, Vessel Hull and Vessel Pollution (if marne assets are acquired), Aircraft Liability (if aircraft assets are acquired) insurance policies, proceeds and collateral related to, held or issued with respect to or in connection with any Asset (including Ban staff) acquired by the Assuming Ban under this Agreement, which such policies, proceeds and collateral are acquired Assets. (2) any interest, right, action, claim, or judgment against (i) any offcer, director, employee, accountant, attorney, or any other Person employed or retained by the Failed Ban or any Subsidiar of the Failed Ban on or prior to Ban Closing arsing out of any act or omission of such Person in such capacity, (ii) any underwriter of financial institution bonds, baner's blanet bonds or any other insurance policy of the Failed Ban, (iii) any shareholder or holding company of the Failed Ban, or (iv) any other Person whose action or inaction may be related to any loss (exclusive of any loss resulting from such Person's failure to pay on a Loan made by the Failed Ban) incurred by the Failed Ban; provided, that for the purposes hereof, the acts, omissions or other events giving rise to any such claim shall have occurred on or before Ban Closing, regardless of when any such claim is discovered and regardless of whether any such claim is made with respect to a financial institution bond, baner's blanet bond, or any other insurance policy of the Failed Ban in force as of Ban Closing; (3) leased Ban Premises and leased Furniture and Equipment and Fixtures and data processing equipment (including hardware and softare) located on leased or owned Ban Premises, if any; provided, that the Assuming Ban does obtain an option under Section 4.6, Section 4.7 or Section 4.8, as the case may be, with respect thereto; and (4) any criminal/restitution orders issued in favor of the Failed Ban; 37 Execution Copy Whole Bank P&A Washington Mutual Bank Henderson. Nevada Case 1:09-cv-01656-RMC Document 32-1 Filed 09/08/10 Page 50 of 52 EXHIBIT 3.2(c) - VALUATION OF CERTAIN QUALIFIED FINANCIAL CONTRACTS A. Scope Interest Rate Contracts - All interest rate swaps, forward rate agreements, interest rate futures, caps, collars and floors, whether purchased or written. Option Contracts - All put and call option contracts, whether purchased or wrtten, on marketable securities, financial futures, foreign currencies, foreign exchange or foreign exchange futures contracts. Foreign Exchange Contracts - All contracts for future purchase or sale of foreign currencies, foreign curency or cross currency swap contracts, or foreign exchange futures contracts. B. Exclusions All financial contracts used to hedge assets and liabilities that are acquired by the Assuming Ban but are not subject to adjustment from Book Value. C. Adjustment The difference between the Book Value and market value as of Ban Closing. D. Methodology 1. The price at which the Assuming Ban sells or disposes of Qualified Financial Contracts wil be deemed to be the fair market value of such contracts, if such sale or disposition occurs at prevailing market rates within a predefined timetable as agreed upon by the Assuming Ban and the Receiver. 2. In valuing all other Qualified Financial Contracts, the following principles will apply: (i) All known cash flows under swaps or forward exchange contracts shall be present valued to the swap zero coupon interest rate curve. (ii) All valuations shall employ prices and interest rates based on the actual frequency of rate reset or payment. (iii) Each tranche of amortizing contracts shall be separately valued. The total value of such amortizing contract shall be the sum of the values of its component tranches. 38 Execution Copy Whole Bank P&A Washington Mutual Bank Henderon, Nevada Case 1:09-cv-01656-RMC Document 32-1 Filed 09/08/10 Page 51 of 52 Execution Copy Whole Bank P&A (iv) For regularly traded contracts, valuations shall be at the midpoint of the bid and ask prices quoted by customar sources (e.g., The Wall Street Journal, Te1erate, Reuters or other similar source) or regularly traded exchanges. (v) For all other Qualified Financial Contracts where published market quotes are unavailable, the adjusted price shall be the average of the bid and ask price quotes from thee (3) securities dealers acceptable to the Receiver and Assuming Ban as of Ban Closing. If quotes from securties dealers canot be obtained, an appraiser acceptable to the Receiver and the Assuming Ban wil perform a valuation based on modeling, correlation analysis, interpolation or other techniques, as appropriate. 39 Washington Mutual Bank Henderson, Nevada Case 1:09-cv-01656-RMC Document 32-1 Filed 09/08/10 Page 52 of 52
EXHIBIT 3 Case 1:09-cv-01656-RMC Document 32-2 Filed 09/08/10 Page 1 of 52 Case 1:09-cv-01656-RMC Document 1-1 Filed 08/26/09 Page 2 of 25 Morgan. Lewis &Bockius llP 1717 Main Street, Suite 3200 Dallas. TX 75201 7347 Tel: 214.466.4000 Fax: 214.466.4001 www.morganlewis.com Ann Marie Painter Partner 214.466.4121 annmarie.painter@MorganLewis.com December 30, 2008 BY HAND DELIVERY Federal Deposit Insurance Corporation 1601 Bryan Street Dallas, Texas 75201 Re: Deutsche Bank National Trust Company Proof of Claim Dear Sir or Madam: Morgan Lewis COUNSELORS AT LAW Enclosed please find a Proof of Claim, which is hereby submitted on behalf of Deutsche Bank National Trust Company. If you have any questions, please do not hesitate to contact me directly. Sincerely, Ann Marie Painter AMP/ph Enclosures cc: John Rosenthal- Morgan Lewis, San Francisco Kristine Bailey - Morgan Lewis, San Francisco DB1162194206.2 Case 1:09-cv-01656-RMC Document 32-2 Filed 09/08/10 Page 2 of 52 Case 1:09-cv-01656-RMC Document 1-1 Filed 08/26/09 Page 3 of 25 Federal Deposit Insurance Corporation as Receiver for: Washington Mutual Bank of BanklFinanciallnstitLltlon and Location) PROOF OF CLAIM CONFIDENTIAL TREATMENT REQUESTED Attachment A contains confidential, nen-publlc financial information" Claimant Deutsche Banlc Natiersl Trost Company requests that the claim, tha informa'en conta/nOO in Attachment A. and the non-public documants attachad hereto be considorad and treated as confidantiaL SSNlTax 10 # (1) 330943418 The undersigned, (2) Barbara Campbell, Vice President says that the Washington Mutual Bank now in liquidation is (Name of BanklFinanclallnstitution) justly indebted to (3) Deutsche Bank National Trust Company in the sum of (IndividueUJolnUCorpor.ltionlParlnership/FormlAgancy) (4) $10,146,399,660 (approximately, see Attachment A) Dollars upon the follOWing Claim: Descriotion of (invoice) claim: liabilitv Number Amount of Claim C (5) $ea EJ<hibit A $6,764,266,440 to L $10,146,399,660 approx., A (see Attachment Al. I M S . Total Claim: (6) Approximately $10,146,399,660 (see Attachment At The undersigned further states that he/she makes this Claim on behalf of (7) Deutsche Bank National Trust Company that no part of said debt has been paid, that (8) Deutsche Bank National Trust Company (IndividueUJoinUCorp"",tionlPartnershipiFirmlAgency) has given no endorsement or assignment of the same or any part thereof, and that there is no set-off or counterclaim, or other legal or equitable defense to said Claim or any part thereof. NAMI::: (9) Barbara Campbell , Vice President
(Signeture of Parson making (Title) the Claim) FIRM Deutsche Bank National Trust Company (If applicable) ADDRESS (10) 1761 Ea.st St Andrew PI CITY/STATE/ZIP Santa Ana, CA 92705-4934 TELEPHONE NUMBER 714-247,6278 The penally for knowingly making or inviting reliance of any false, forged, or counterfeit statement, document. or thing for the purpose of influencing in any way the action of the Federal Deposit Insurance COl1Xlration is a fine of not more than $1,000,000 or imprisonment for not more than thirty years, or both (18 U.S.C. Section 1007). RLS7212 Case 1:09-cv-01656-RMC Document 32-2 Filed 09/08/10 Page 3 of 52 Case 1:09-cv-01656-RMC Document 1-1 Filed 08/26/09 Page 4 of 25 CONFIDENTIAL TREATMENT REQUESTED ATTACIIMENT A to Proof of Claim of BANK NATIONALTIWST COMI'ANY, AS TRUSTEE ANIl CUSTOIlIAN A. C\I'ACITIES ANI) DOCUMENTS. I. This proof of claim ("'Proof of Claim'") is made by Deutsche Bank National Trust CompJlly (,"DBNTC") (a) as trustee ("Trustee") for the securitization trusts listed on Exhibit 1\-1 attached hereto (the 'Trusts"). on behalf of the Trusts and the owners of certain residential mortgaged backed securities issLied by the Trusts (the Securities'). (b) as trustee of certain "net interest margin"trusis listed on Exhibit A-2 ("NIM Trusts", and collectively with the 'frusts, the "Securitization Trusts") pursuant to which DI3NTC owns, on behalf of NIM Trust bcncliciarics. interests in certain Securities (the "NIM Trustee") and (e) as custodian (the "Custodian") under eertain custody agreements listed on Exhibit A-3 (the "Custody Agreements") by and among DI3NTC. and one or more of Washington Mutual Bank (in some cascs, as successor- in-interest to Long Beach Mortgage) and/or its affiliates (collectively, 'WAMU'). and/or third party lenders or purchasers of mortgage loans. 2. Each or the Trusts holds. as Trust asselS or collateral. mortgage loans originated by and/or sold into the rrusts by WAM U. 3. With respect to each Trust, DBNTC entered into one or more Pooling and Servicing Agreements. Servieing Agreements, Indentures or Trust Agreements, and related ancillary agreements (collectively, the "Governing Documents"). The Governing Documents are voluminous and are in the possession of both the Trustee and WAMU. Accordingly, it is impractical and wasteful to allach them to this Proof of Claim. Additional documentation regarding the Trusts is available on the SEC's EDGAR website at http://sec.gov/, and the monthly distribution reports and prospectus supplements for each Trust arc available on the Trustee's investor reporting website at hltps:/Ilss.sfs.db.comlinvestpublic/. Upon request by the FDIC, the Trustee will furnish electronic or hard copies of any Governing Documents in its possession. 4. Pursuant to the Governing Documents for each Trust, WAMU sold, either directly or indirectly, mortgage loans into the related Trusts. In connection with such sales. WAM U also made numerous representations, warranties and covenants ("Representations and Warranties") concerning the mortgage loans, which Representations and Warranties were ultimately assigned to the Trusts pursuant the Governing Documents and certain ancillary agreements. The Trusts have claims for breach of such Representations and Warranties as further described herein. 5. DBNTC has also served as Custodian under the Custody Agreements. Pursuant to the Custody Agreements, DBNTC has held in custody mortgage loan files evidencing mortgage loans originated, purchased, financed and/or serviced by WAMU. In 107017716 Case 1:09-cv-01656-RMC Document 32-2 Filed 09/08/10 Page 4 of 52 Case 1:09-cv-01656-RMC Document 1-1 Filed 08/26/09 Page 5 of 25 , - - addition. pursuant to certain Custody Agreements. the Custodian held and disbursed funds with respect to the funding and/or financing of such mortgage loans in accordance \\ilh instructions furnished 10 the Custodian by WAMU.loan purchasers or lenders. The Custody Agreements arc voluminous and aTC in the possession of both the Trustee and WAMU. Accordingly. it is impractical and unnecessary to attach them to this I)roof of Claim. Upon request by the FDIC. the Trustee will furnish electronic or hard copics of any Custody Agreements in its possession. 6. DBNTC is aware that certain other parties to the Trusts. including. without limitation. securities underwriters. depositors. loan scrviccrs. insurers and investors. intend to file proofs of claim in these proceedings relating to the Governing Documents and ancillary agn:cments which may be duplicative of. or supplemclltal to. the claims statl..:d herein (the "Third Party Trust Rl:Iated Claims"). To the extent that such Third Party Trust Related Claims relate to or arc property of the Trusts. DBNTC incorporates such Third Party Trust Related Claims herein by reference. B. DESCIUPTION OF CLAti\IS. Claims Arising from Brc:lch of Ilepresent:llions and Warranlies Range: 56.764 billion 10 510.146 billion) 7. Pursuant to the Governing Documents. WAMU. as seller and Imasterl serviceI'. made certain Representations and Warmnties in connection with the sale of the mortgage loans to the Trusts. WAMU has breached certain of these Representations and Warrantics. Pursuant to the Governing Documents. WAMU has express contractual obligations (i) to notify certain parties to the Governing Documents, including the Trustee. when WAMU becomes aware or breaches or Representations and Warranties. (ii) to make certain cure payments with respect 10 certain such breaches or (iii) to repurchase the mortgage loans affected by WAMU's breaches. at the repurchase price (the "Repurchase Pricc"") specificd in the Governing Documcnts (typically equal 10 the unpaid principal balance or such mortgage loans, plus accnlcd interest thereon through the date of repurchase) (the "Repurchase Obligations""). Further, as described below. WAMU is liable to Ihe Trustee and the Trusts for all liability, loss, cost and expense arising from breaches or Representations and Warranties, including all costs and expenses of enforcement or these obligations. 8. Based on the public statements or the FDIC, It IS unclear to the Trustee which obligations under the Governing Documents the FDIC purports to have assumed and assigned to JPMorgan Chase Bank. National Association (,JPMC"). Moreover, the FDIC has not notified the Trustee whether it intends to repudiate any obligations of WAMU under the Governing Documents, many of which obligations are executory in nature. The Trustee asserts that thc FDIC does not have the power, with respect to the Go\erning Documents for any particular Trust, to "cherry pick" valuable contractual rights of WAMU, such as servicing rights, whilc repudiating potcntially burdensome obligations or WAMU, such as Repurchase Obligations under those same contracts. Rather. if the FDIC wishes to reap the benefits of these contracts (by receiving the purchase price paid by JPMC for WAMU's assels), it must also accept their burdens. Accordingly, to the extent that the FDIC purports to have assumed and assigned to JPMC any rights and benefits of \VAMU 10 service Mortgage Loans under the 1117017776 Case 1:09-cv-01656-RMC Document 32-2 Filed 09/08/10 Page 5 of 52 Case 1:09-cv-01656-RMC Document 1-1 Filed 08/26/09 Page 6 of 25 - 4 - Go\crning Documents lor any Trust, the FDIC must make provision to perform fully all of WAMU's obligations under the Governing Documents lor thai Trust. In this regard. the Trustee notes that a single entity-Washington Mutual Bank (fka Long I3cach Mortgage Cornpany)-- generally entered into the Governing Documents both as sellcr and as I.mi1stcrJ scrviccr. In addition, the Governing Documents represent an integrated sct of conlraclUal undertakings on behalf of WAMU with respecl to the formation and servicing or the Trusts and WAMU (or its successors and assigns) canno! selectively assume the benefits of these undertakings while repudiating the rclalCd burdens. To the extent that WAMU has either (a) failed-in its capacities as seller or scrviccr-- to notify the Trustee and other transaction parties of material of Representations and Warranties of which it was awarc. andlor (b) repudiates and fails 10 perform its obligations to replace or repurchase defective loans. the Trusts have claims for breach of such obligations (lhe "Repurchase Claims"'). Moreovcr, even if the FDIC did have the power to rcpudiate certain obligations of WAMU 10 the Trusts while assuming and assigning olher obligations. the Trusts would havc a right or set-ofT against any and all amounts owing to WAMU under the Governing Documents (including the right to recover servicing advances) with respect to any and all damages arising from the breach of such repudialed obligations. 9. As of September 28. 2008, the Trusts held in excess of $49.9 billion in current principal balance outstanding of mortgage loans sold to the Trusts by WAMU. Recent media reports allege certain abuses in WAMU's loan origination procedures which, if true. would constitute breaches of the Representations and Warranties. (see :&. attached NY 'rimes article dated as of December 27, 2008). Notwithstanding provisions of the Governing Documents permitting the Trustee and certain other parties access to WAMU's books and records concerning the mortgage loans, the Trustee is informed and believes that during the lasl 18 months, WAMU has consistently refused to allow Ihe Trustee, bond insurers, and investors with an interest in the Trusts to perform any meaningful due diligence to determine whether Representations ,gnd Warranties were breached. Since WAMU's denial of counterparties' contractual inspection righls has deprived those parties of the ability to detect and quantify specific breaches of Representations and Warranties, claimants must be given reasonable access ahd time to investigate their claims prior to specifying them with greater particularity. Nevertheless, on the basis of the limited data currently available to the Trustee. the Trustee fllfther describes these claims below. 10. Assuming. for purposes of this Proof of Claim. thai WAMU has and will continue to breach its obligations with respeci to Repurchase Claims, the damages Oowing from such breaches will vary depcnding on the losses suncred by the Trusts in respect of the relaled mortgage loans. Certain of the properties underlying the mortgage loans subject to Repurchase Claims either (a) have been foreclosed upon and are owned by the Trusts as of the date of this Proof of Claim (the "REO Loans") or (b) are owned by the Mortgagors (the "Mortgagor-Owned Loans"). The dollar amount of any Repurchase Claims related to REO Loans and Mortgagor-Owned Loans will be affected by the value of those loans and their underlying collateral because the damages suffered by the Trusts as a result of WAMU's breach will be partially offset by the value of the collateral retained by the Trusts. Due to the ever-changing nature of market forces impacting the value of REO Loans and Mortgagor-Owned Loans, Ihe amount due to the Trusts on account of the REO Loans and Mortgagor-Owned Loans 107017171> Case 1:09-cv-01656-RMC Document 32-2 Filed 09/08/10 Page 6 of 52 Case 1:09-cv-01656-RMC Document 1-1 Filed 08/26/09 Page 7 of 25 - 5 - remains in flux. Until the alllount or WAMU's exposure on REO Loans and Mortgagor-Owned Loans is linally determined. the Trusts' corresponding claim remains unliqllidatcd and may decrease or incrcusc as a result or lluctu<ltiol1s in lhe valuation or the underlying property and rdated lo.ms. and payments or principal and interest either made or not made by the mortgagor of the underlying loans. Certain of the properties underlying the mortgage loans subject to Repurchase Claims have been ron:doscd upon and in turn sold ("REO Sold Loans"). The sale prices of the properties underlying the REO Sold Loans will be a partial offset 10 lhe Repurchase Price related to stich REO Sold Loans. 11. On infonnation and belief. taking into account (<I) industry infonnation regarding frequency of breaches of representations and warranties in portfolios of mortgage loans similar to those sold by WAMU to the Trusts. (b) the pcrfommnce of the mortgage loans held by the Trusts and (c) the scvcrity of losses cxpericnced by thc Trusts to date and anticipated in the future. the Trustee estimates that the Trusts have claims in respect to brcaches of Rcpresentations and Warranties. in the estimated range of $6.764 billion to $10.146 billion. 12. Although Representations and Warranties were breached at the time that they were made. certain of the Repurchase Claims of the Trusts are unmatured. unliquidated and/or contingent in nature because. although breaches of Representation and Warranties exist for certain mortgage loans, such breaches have not been (a) discovered and/or (b) asserted. and/or (c) otherwise given risc to claims for the Repurchase I>rice as of the date hereof. The actual Repurchase Claims relating to such loans \\ould be increased by accrued interest thereon and the Trusts' cost of enli:lrccmenl. and be partially offset by the value of mortgage loan collateral and mortgage payments retained by the Trusts by reason ofWAMU's failure to repurchase such loans. 13. In addition to the foregoing, under the Goveming Documents, WAMU is also subject to Repurchase Claims with respect to missing or defective documents in mortgage loan liles. The Governing Documcnts generally provide that if a material defect in any Mortgage File is discovered which may materially and adversely affect the value of the related Mortgage Loan, or the interests of the Trustee (as pledgec of the Mortgage Loans). the Noteholders or thc Certilicateholders in such Mortgage Loan, then the responsible party shall Cllre such defect, repurchase the related Mortgage Loan at the purchase price or substitute a qualified substitute mortgage loan for the related Mortgage Loan upon the same terms and conditions set forth for breaches of represcntations and warranties as to the Mortgage. 14. The Trustee or other document custodian has furnished WAMU, on an ongoing basis. document exccption reports with respect to missing or defective loan file documents. Tht: Exceptions Reports arc voluminous and are in the possession of both the Trustee and WI\MU. Accordingly it is impractical and wasteful to attach thcm to this Proof of Claim. Upon request by the FDIC. the Trustee will furnish electronic or hard copies of any Exceptions Reports in its possession. If WAMU repudiates or fails to satisfy its obligations undcr the Governing Documents. the Trustee will require additional time to assess the materiality of the remaining missing defective documents and to calculate thc amount of any Repurchase Claims with respect thereto. For purposes of this Proof of Claim. however, the Trustee asserts that all loans with missing or defective loan file 1010177111 Case 1:09-cv-01656-RMC Document 32-2 Filed 09/08/10 Page 7 of 52 Case 1:09-cv-01656-RMC Document 1-1 Filed 08/26/09 Page 8 of 25 6 <lrc subject (0 Repurchase Claims lor Repurchase Price. The Trustee is not in a position to calculate the amount of such Repurchase Price Ullliithc population of such loans and the materiality of any doculllent exceptions arc lioaHy determined (since borrowers continue to pay interest on some of these loans and, in many cases. other recoveries continue to be made on collateral securing such loans). Intll'mnifil':tlion Claims 15. The Trusts have been damaged by virtue of WAMU's dcfaulls and breaches with respeci to the Representations and Warranties under lhe Governing Documents and agreements. Without limiting the generality crlhc lorcgoing. the Trusts have incurred. and will continue 10 incur. significant legal expenscs enforcing mortgage loan docunu.'nts and defending against borrower counterclaims and third party claims arising from breaches or alleged breaches of Representations and Warranties or of other obligations of WAMU (including loan servicing obligations) under the Governing Documents. 16. Without limiting the generality of the foregoing. WAMU is obligated to indemnify. defend and hold lhe Trusts and the Trustee hannless all liability, loss, cost or expense arising from the claims asserted in the following litigation mallers: (a) Elaine Trahan vs. Long Beach Mortgage Company et ai, pending in the United District Court. Eastern District of Texas. A putative class action seeking to invalidate certain variable rate mortgage loans under Texas law. (b) Jenkins vs. Deutsche Bank et ai, actions brought III the United States District COllllt for the Eastern District of New York and the Southern District of Florida alleging inappropriate foreclosure and debt collection activity. (c) Suits and other proceedings against the Trusts and/or the Trustee by the cities of l3ulhllo. NY. Cleveland. 01-1. and other jurisdictions claiming that REO properties owned by the Trusts have not been maintained in accordance with law and constitute a nuisance. In addilion. the Trusts and/or the Truslee have been forced to address similar allegations. Such property maintenance is the sole obligation of WAMU, as loan serviccr. wilh respect 10 certain of the properties at issue in Ihese matters. The affected Trusts and the Trustee arc entitled to indemnification by WAMU, its successors and assigns. against any liability, loss, cost or expense suffered in connection with such mailers. (d) Suits or counterclaims (typically asserted in the context of foreclosure proceedings) alleging breaches, inter alia, of the Truth in Lending Act, Fair Debt Collection Practices Act and other laws, in connection with the origination and/or servicing of WAMU-originated mortgage loans currently owned by Trusts. Because WAMU. as Imaster] servicer has handled all such litigation on behalf of the Trusts and the Trustee, the Trustee is currently unaware of the existence or nature of all such claims and reserves the right to amend this Proof of Claim to specify such matters at a later date. The affected Trusts and the Trustee arc entitled to indemnification by WAMlJ. its successors and assigns. against any liability, loss, cost or expense suffered in connection with such maners. Case 1:09-cv-01656-RMC Document 32-2 Filed 09/08/10 Page 8 of 52 Case 1:09-cv-01656-RMC Document 1-1 Filed 08/26/09 Page 9 of 25 - 7 - 17. Pursuant to the Governing Documents and applicable law. WAMU is liable to till.: Trusts and the Trustee for any losses, claims. expenses or damages, including legal fees and related costs. arising oul of or based upon any breaches or any representation, warranty or covenant made by WAMU or any aniliate of WAMU in the Governing Documents. Such liability arises both from WAMU's breach of ils contractual obligation 10 the Trusts and the Trustee to perform all of its obligations under the Governing Doculllents and from WAMU's obligation to indemnity, defend and hold the Trusts and the Trustee harmless from any liability. loss. cost or expense arising from WAMU's failure to pcrlofm such obligations. Moreover. even il"'he FDIC, as receiver for WAMU. were entitled to assume and assign certain obligations of WAMU while repudiating others. the Trustee and the Trusts would have a right of set-ofr with respect to breach claims for any repudiated obligations, against any and all amounts owing by the Trusts to WAMU (including the right to recover servicing advances) in any capacity under the Governing Documents. To the extent that WAM U (a) assumes. or assumes and assigns, any of its rights under the Governing Documents, and (b) indcmniries, or causes its to indemnify, the Trusts and the Trustee lor such matters. such indemnilication obligation will have been satisried. Although. to date. the Trustee is informed and believes that JPMC has pedormed certain OfSllCh obligations. neither JPMC nor the FDIC. as receive of WAMU. has made a clear statement to the Trustee specifying which obligations of WAMU have been assumed by JPMC and which, ifany, obligations have not been so assumed, but rather assumed or rejected by the FDIC as receiver of WAMU. Accordingly, for purposes of this Prool" or Claim, the Trustee assumes such obligations may not be fully satisfied. 18. l3ased upon the foregoing, the Trustee asserts a claim against WAMU for indemnirieation for. inter alia, all losses, claims, expenses and damages, including legal fees and related costs, arising out of or based upon any breaches of any representation, warranty or covenant made by WAMU under the Governing Documents. Servicing Chlims 19. As stated above, WAMU generally served as "servieer" or "master servieer" with respect to the mortgage loans held by the Trusts. The Trustee is informed and believes that JPMC intended to assume, at a minimum, all of WAMU's loan servicing rights and obligations. To the extent that JPMC. as successor-in-interest to WAMU, as fmastcr] servieer, perlorms all obligations of WAMU, as l"master'! servieer. under the Governing Documents (including by curing any breaches that have occurred), WAMU will have mitigated claims with respect to WAMU's servicing of the loans. The Trustee reserves the right to amend this Proof of Claim to sped fy further any servicing claims in the event thai such assumption has not taken place. Claims as NIM Truslee 20. As NIM Trustee, the Trustee is the legal owner, for the benerit of securities holders under the NIM Trusts, of Securities issued by the Trusts. Since the NIM Trusts were formed concurrently and in conjunction with the corresponding Trusts, the NIM Trustee was the original purchaser of such Securities. 107017776 Case 1:09-cv-01656-RMC Document 32-2 Filed 09/08/10 Page 9 of 52 Case 1:09-cv-01656-RMC Document 1-1 Filed 08/26/09 Page 10 of 25 - 8 - 21. As purchaser of the such Securities on behalf or the NIM Trusts. the NIM Trustl:c hereby alleges Ihal. 10 the extent that WAMU knew or should haw known or the bn.:achl.:s or Representations and Warranties described above. the NIM Trusts have a claim for COllllllon law fraud and/or negligellt misrepresentation and/or violation 01" applicable Iccteral and state securities hms in connection with the issuance. distribution and sale or the such Securities to the 1M Trusts. Such claim is unliquidated and p<lrtially unmatured. but would be measured by the impact if any. of such breaches on c<lsh flows 10 the NIM Trusts. Cl:lims as Cuslodi:l11 22. Pursuant to the Custody Agreements. DB TC is entitled to be paid certain fees slipuhllCd therein. pillS expenses incurred in connection with its serving as Custodian. In addition. where WAMU is scller/servicer under the Custody Agreement. WAMU has agreed to indemnify. defend and hold the Custodian harmless against all liabilities. loss. cost and expense incurred by the Custodian in the pcrfonnance of its duties as Custodian. The Custodian reserves the right to amend this Proof of Claim to specify further any claims rclating to any fees or expenses arc incurred and remain outstanding in connection with the Custody Agreements. C. M1SCEI.I.ANEOlJS 0' ->. 24. 25. 26. I07{lIn, 6 B) executing and liling this Proof of Claim. D13 TC docs not waive any right to any security or any other right or rights with respect to any claim that D13NTC has or may hmc against WI\MU or any other person or persons. The riling of this Prool" of Claim is not intended and should not be construed to be an election of remedies or waiver of any pas!. present or future Defaults or Events of Default undcr the Governing Documents and ancillary agrccments. To the knowledge of the signatory hereto, the claims arc not subject to any setoff or counterclaim, and no judgment has been rendered on the claims. 'I'he amount of all payments made prior to the date hereof, if any, have been credited and deducted. DBNTC reserves its right to amend and/or supplelllent this Proof of Claim and to assert any and all other claims of whatever kind or nature that it has, or may have. that cOllle to D13NTCs altention or arise aner the tiling of this Proof ol" Claim. The filing of this Proof of Claim shall not be deemed a waivcr of any such claims or rights. Nothing contained in this Proof of Claim shall be deemed or construed as: (a) a waiver of. or other limitation on, any rights or remedies of DI3NTC or the Securitization Trusts. or any predecessor in interest to 013 TC or the Securitization Trusts, under the Governing Documents or ancillary agreements, at law, or in equity (including any setoff rights. lien rights. rights of recoupment. or any olher rights that the Trustee or each Trust has or may have against WAMU or any other entity). all of which rights are expressly reserved: (b) a consent by DB TC or the Securitization Trusts, or any predecessor in interest to DB TC or the Securitization Trusts, to the jurisdiction of an) court with respect to proceedings. if any. commenced in any action against, or otherwise involving DB TC or the Securiti7..ation Trusts, or any predecessor in interest to D13NTC or the Securitization Trusts; (c) a waiver or release of, or any limitation on 013 TCs or the Securitization Trusts', or any predecessor in interest to DBNTC's or Case 1:09-cv-01656-RMC Document 32-2 Filed 09/08/10 Page 10 of 52 Case 1:09-cv-01656-RMC Document 1-1 Filed 08/26/09 Page 11 of 25 107017776 - 9- the Securitiz'ltion Trusts', right to trial by jury in the Court or any other court in an) proceeding; (d) a \\aiver or release of: or any other limitation on, DI3NTC's or the Seeuriti/..ation Trusts', or any predecessor in interest to DI3NTC or the Securitization Trusts', rights to have any orders entered only arter de novo review by the applicable court; (c) a \\aiver of. or any other limitation on, DI3NTC or the Securitization Trusts', or any predecessor in interest to DB TC's or the Securitization Trusts', right to seek a \\ithdnl\\al of the reference with rcspect to any maller. including any mallcr relating to this Proof 01" Claim: or (I) a waiver or release of: or any other Iimiwtion on, DB TC's or the Securiti/...ttion Trusts', or any predecessor in interest to DBNTC's or the Sccuriti/.ation Trusts', right to assert that any portion of the claims asserted herein arc entitled to treatment as priority claims. Without limiting the generality of the foregoing, the Trustee asscrts, on behalf of each Trust and itself. the right to sct 00' the amount of' all claims of such Trust and itself as Trustee of such Trust, against all claims and amounts asserlable by or distributable 10 WAMU (or its successors-in-interest under thc Governing Documents) ill any capacity, including, without limitation, any rights of WAMU to recover delinqucncy advances, servicing advances or other amounts distributable with respect to securities or other interests in such Trusts, Case 1:09-cv-01656-RMC Document 32-2 Filed 09/08/10 Page 11 of 52 Case 1:09-cv-01656-RMC Document 1-1 Filed 08/26/09 Page 12 of 25 The Reckoning. WaMu Built an Empire on Bad Loans - Series NYTimc... http://www.nytimes.coml2008112128/businessl28wamu.html?J=1 &sq><w... W.lcom. to TlmnP.op" _.- Le1S You Share and Drscover the BeSl ol NYTomes com 111J ..... log In Or
Business C", Hoone Del'very Log In H"9"'"" Now SMrcIl .... NVTr..... COllI - WOIUJ) US l'l Y IIU:GIOl'l KUSIl'lESS nIlNOlOGY SCIENCE ltEALTlt SPORTS OPll'lIOl'l AATS S'M.I'; TIl.AVf.1. JOlIS REAL.. ESTAn AUTOS Se,rch Business N_. S'Xh, F.... ds. COO''4Joaf_ Fin,neialTools Selocl a FnanciaI Tool Mont in Bu.in w_ _.... E..-., _.. _ Your -.. -1sInll _. Money fHE RECKCN<lG Saying Yes, WaMu Built Empire on Shaky Loans DIEGO - As a supervisor at a Washington Mutual mortgage processing center. John O. Parsons was accustomed to seeing baby siners claiming salaries worthy of ooIlege presidents, and schoolteachers with incomes rivaling stockbrokers'. He rarely questioned them. A real estate frenzy was under way and WaMu, as his bank was known. was all about sa);ng )"eS. 5 .... ""ErCH"l,I(lRG[HSON __a.e-11.20011 ltIe hope to do to this industry what did to theirs did to theirs, Costro did to theirs and UJ)e'S-IIQ1Il\' , ....",,/ did to their industry. And Ilhink if we've don" OIJr job.five yeurs/rom now you're nOl going to 0011 us a bank. [ ....0- "'"""_,. - Keny K. Killinger, chiefexecuth'eof 2003
n_.... rnor1ll9 t<:l_ lor Wn/w"lgIon"-- Juol """ " Olot on<I 0-1 ,'dOnII ThIll .".., __us '" 00 'n. Olot' The Reckoning Mor/gage Factory Miele. in Ihis nrie. ho'" uplored lh' eou..,1 ollhu flMncioJ en,i. Yet evtn by WaMu's relaxed standards, one mortgage four years ago raised eyebrows. The borrower was claiming a six-figure income and an unusual profession: mariachi singer. Mr. Parsons could not verify the singer's income, so he had him photographed in front of his home dressed in his mariachi outfit. The photo went into a WaMu file. Approved. TIle (jrcen Ruad less TrJ\ elt::d II t;" ,.. , .. , .... ' 0, Flush Wilh Energy 10.' 110 ., II Multimedia I\ h'';:".'n ,\,' \.1, \, ... r"r..- lie if I said every piece of documentation was properly signed and dated: said Mr. Parsons, speaking through wire-reinforced glass at a California prison near here, where he is serving 16 months for theft afi.er his (ourth arrest - all in\'Olving drugs. While Mr. Parsons, whose incarceration is not related to his work (or WaMu, oversaw a team screening mortgage applications, he was snorting methamphetamine daily, he said. Dnha ;Ind Oalian " II .T.... , II's Tnt' L;ltl" Inr Laler . ,. lof7 .' In our world, it was tolerated,- said Sherri ;(,aback. who \'o'Orked for Mr. Parsons and recalls seeing drug paraphernalia on his desk. -E\'e!)'body said, 'He gels the job done.' At WaMu, getting the job done meant lending money to nearly anyone who asked for it - lhe fome behind the eQt;\'nv i10rketltltS 1213012008 II: 13 At-. I Case 1:09-cv-01656-RMC Document 32-2 Filed 09/08/10 Page 12 of 52 Case 1:09-cv-01656-RMC Document 1-1 Filed 08/26/09 Page 13 of 25 The Reckoning - WaMu Built an Empire on Bad Loans - Series - NYTimc.. http://www.nytimcs.com/2008/12/28/business/28wamu.html?J"" I&sq""w.. bank's meteoric rise and its precipitous collapse this year in the biggest bank failure in American history. Their accounts are consistent with those of 89 other former employees who are confidential witnesses in II class action filed against WaMu in feder,ll court in Seattle by former shareholders. According to these accounts, pressure to keep lending emanated from the top, where eXL'CUtives profited from the swift expansion - not least, Kerry K. Killinger, who was WaMu's chief executive from 1990 untit he was forced out in September. S'1l" ' k> Dol ...,.,ftod _ '''9O<'O'C _ b..ob I :;. '" ... P""''Yb"." 9. (,,,,,,, I,,, 1', "I<' It', N,,' ,I""., ,',,, II", an
3. 1I.1i"" 4. "" NI'Il .... Il,,,"''''' 110,' N,-,,, 5. \'"., 11,,;1\ Eml'''''O" SIi"b I"",,,, (" ,:",,,'11)', 110>1""'" '1'<>1<1 ,\le 11',,1 I.", ,11o"." l. 11'11.", "'n,'" ,\",,,', ,.,,1',11 \ \1.,,,, 2 n, l'.'lL.',,', \ II,- 10, .\l,.ll,',,, '0" 1 (;".1'''''''' (!:o", I' 8 \",,, T'UI'I" 1l"''''''''<I, GoI:>C""""",,,lOS'. Breaking News Alerts by E-Mail MOST POPULAR BUSINESS EIMI.EO 8l0GOEO Interviews with two dor.en fonner employees. mortgage brokers, real estate agents and appraisers reveal the relentless pressure to chum out loans that produced such results. While that sample may not fully represent a bank with tens of thousands of people, it does renect the views of employees in WaMu mortgage operations in California, On a financial landscape littered with wreckage, WaMu, a Seattle-based bank that opened branches at a clip worthy of a fast-food chain, stands out as a singularly brazen case of lax lending. By the first half of this year, the value of its bad loans had reached $11.5 billion, nearly tripling from $4.2 billion a year earlier. PUSH TO GROW Fo<..... ""lIIOY.... ...,. Nl ",trI K ry Kdlngooo "' e"'"'(10 WaMJ Dec a IoanfaclOry. ognomg DOf,,,,,,,,",' ".:",,"". Florida, Il1inois and Texas. Between 2001 and 2007, Mr. Killinger received oompensation of S88 million, acoording to the Corporate Library, a research firm. He declined to respond to a list of questions, and his spokesman said he was unavailable for an interview. During Mr. Killinger's tenure, WaMu pressed sales agents to pump out loans while disregarding borrowers' inoomes and assets, according to former employees. The bank set up what insiders described as a system of dubious legality that enabled real estate aj:lents to collect fees of more than $10,000 for bringing in borrowers, sometimes rnaking the agents more beholden to WaMu than they were to their clients. WaMu gave mortgage brokers handsome commissions for selling the riskiest loans, which carried higher fLOCS, bolstering profits and ultimately the compensation ofthe bank's executh'es, WaMu pressured appraisers to provide innate<! property values that made loans appear less risky, enabling Wall Street to bundle them more easily for sale to investors. DINING Let the good times tiptoe ......, ,,, O""r>g Now v....... 'ee,pe. ""_' 'eoP'" An_ok! ;>(O'l8',ntance 1:>_t>8 fo<..9Ol'''''' "It was the Wild West," said Steven M. Knobel, a founder of an appraisal oompany, Mitchell. Maxwell & Jackson, that did business with WaMu until 2007. "If you were alive, they would give you a loan. Actually, I think if you were dead, they would still give you a loan." .lI'1I1"!X'1ll lh'l"t, which bought WaMu for $1.9 billion in September and rccciwd $25 billion a fC!W weeks later as part of the taxpayer bailout of the financial services industry, declined to make former WaMu executives available for interviews. JPMorgan also declined to oornment on WaMu's operdtions before it bought the company. "It is a different era for our customers and for the company," a spokesman said. -'OIIERTlSEI.'ENTS
rw-d!\,j '" , n" can moe' ""'., ,,,,,,,.11>< , N.... d '0 ."ow mo,.,? Go< 0"""" do' ..... 0' n... . Go, SO% o" ... g... 0' 1M Now YO,' 1,mo, Gel lome. Ro.o", F,... A0'llU' Now.pop'" R..o. L". R..' DooHte Now ,on., ... (,.,r'" ,,'! "0':0 For those who placed their faith and money in WaMu, the bank's implosion came as a shock. NOV. of WAS JtTS1' Nt: UGJl'fImIG. SUbIcrIbfl """\0 Th. N... \\>11 TIme, lTd l!O1 50" 011 C1ktI- _.
"I never had a clue about the amount of off-the-cliffactivity that was going on at Washington Mutual, and I was in constant contact with the company," said Vincent Au, president of Avalon Partners, an investment firm. 'There were people at WaMu that Ad. by Google 2 0f7 12/30/2008 II: 13 AM Case 1:09-cv-01656-RMC Document 32-2 Filed 09/08/10 Page 13 of 52 Case 1:09-cv-01656-RMC Document 1-1 Filed 08/26/09 Page 14 of 25 The Reckoning - WlII\'lu Hui It [In On Bad l.oans - Series - NYTilllc... hllp:llwww.I1Ylimes.co11l 1 200S/12/2S/busil1css/2Swamu.hlml'! r I&sq w.. 30f7 l"alL'd nuthin); more th:lll a shnm or charade. These people broke e\"Cry f\llld:, menIal nile of nll111 i a COl1lll:111Y. Some WaMIl employ..... who work.....:1 for Ihe bank during the boom now han' ll.1jrels. was a dis);r.lce, $1l{!U:1ll3 Zwl'ibcl. :1 fonner financial repl"CSCntalil"C al a WaMu br.lIlch III 11:1. WI were gh'ing loans 10 poeople Ihat ne"... '!' should havc had loons: If Ms. Zwcibcl oo.lbtcd whelher customers could JXI)'. sllpenisors din.'Cl.I'! her 10 kl'Cp she !hIltl "We were lold from III' :-1)(I\'c Ihal Ih:Il's not Ollr concern,' she !hIid. "Olir concern is just 10 wrile Ihe loan: 1111' IIltimate SUllCl"\isor:1I WaMIi Mr Killinger. who jOIl1...od Ihc OOIl1IJan)' III 19BJ alld b"''ClllllC child C.\:l...IlIIII 111 1l}90, lie mheriled a bauk Ihal was founo..:d in 1881) and hatl...unil....od Ihe l'>l,>pn'S.Slun :md the scandal oflhe 198us. An Ul\'CSlmenl anal)'SI b)' lramlng. he was allunt.od 10 Wall Stn.'Ct's for llclwl'Cn 10111' 19<}6 and COIrI) :2002, he Iransformed WaMu into Ihe naliou's si:Clh-lal'l;l'St b:UlJ. Ihruugh a series of acquisitions. Acnlcial deal came in 1<)99, with the purchase of Long Beach Financial, a California lender spl.'cia1i:ljng in subprime mortgages, loans extended 10 borrowers with troubled "n.odit. WaMu undt:rsoon.od its eageOlcss to lend with an advertising introduced during the 2003 AcadcllI)' Aw:mls: -rhe Power ofYcs." No Illere advertising pilch, Ihis was also Ihe rmllllr.l insidc thc b<lnk, undcrwriters !hIid. "W:IMu carne Ollt with lhat and thaI was what we had to live lois, ".abllck said. "We jokl'!l about It a 101." ,\ file would gl.'l 11l:lrked problemalic and then somehow gel appro\'l'!!. "We'd say: 'O,K,! ']111' power of ycs: " I{...,\'enue at WaMu's home.lending unit swelll'll frum $707 million in 2002 to almost $2 billion Ihe following )'('al", when the I'ower of Yes campaign st:lrtlod. Hc1ween 2000 and 2(/O:!. W:IMll'S I'Cl:lil br.lIlchcs gI'Cw 70 percent, l'Caching 2,200 anuss 38 SlaleS, :IS lhl' bank IISl'll an inlagc of chcek)' irrc\"Crenec to attr.lct new eUSlolllers. In :Ids, casually dressl'll WaMu employ...'CS ridicult'll staid b:lIlkers ill suits. IlrHllches were pllshl'll tu inlTC:ISC lending. "It was just disgusting," said r.ls, Zwcibcl, the Tampa represenlati"e. -I'hcy wanted you to spend lime, while yOtJ're running Ieller tr.lnsaetions 1111d opel1lng thlocking accounts, selling pt.'Ople lo;lns." EmplO)'l'CS in Tampa who fell short were orden.'<!lo drive 10 a WaMu office in SaraSQIa, an hour away. There, they sat in a phone bank with 20 other pt.'Ople, calling t:ustomcrs to push home equity 100\ns. -ille n.'gional manager would be O\'f!r your shOlllder, listening to e\'eI')' ..... Ms, Zweibcl rct.:allcd. treatl'<! US like we were in a On the other end of Ihe counlry, at WaMu's San Diego processing office, 1\ls. "..aback's job was to lake loan applicalions from branches in Soulhern California and make sure they passed muster, Most oflhl' loans she said she handled merely required botTowers to provide an address and Social Security number, and to state their income and assets. She 10111 applications Ihrough WaMu's romputer system for appI'O'o'3.l. If she nceded more Umbilical Cord Bank Gel a FREE InlOfmiIhon 1<11 CA ReSlclcnts Save $500, &p 1116 _ VlaCot'd convcord-6Iood-&pefls Cord Blood Banking Bank You Babf's Cord Blood CA Re5Idents Save 5500, Up 1116 _ ViaCot'd eomccwd-6Iood-Experts 12/3012008 11: 13 AI\ 1 Case 1:09-cv-01656-RMC Document 32-2 Filed 09/08/10 Page 14 of 52 Case 1:09-cv-01656-RMC Document 1-1 Filed 08/26/09 Page 15 of 25 The Reckonilll; - IlLii 11 an bllpiro: on Bad Loans - Series - NYTime... http://www.n},til1ll:s.connOOSI12128/busillcssl28warnu.J111l11? r I w... infurmatu.m. bhe had to t'tlllsuh with :1 lo;lI1 officer - which she dcscrilx:d as all UI1I11o.::1S;IOt .....,. -n1t.'y would be furinl"": rots. ,..aback said. -rhey wuuld ]Jut it Oil )"Ou, that they tn I:etllaitl iryou stood in the way." On Olle lo;lll ;lllplicatlnn III 2005,:1 borrower idcntilk-d himsclf as:. g:ll"tlener ami listed hls mouthl) Int"Ome ;.t S12.00U. 1\ls. rt.'t"allcd. She rould not verify his busiUt:s... lit.....nsc. so she touk th... file to her buss, 1\lr. "arsons. lie u.st.-d Ihe lIl"riachi sing...r as illspiration: a phO!oofthe borrower's truck .."nbl"7.(llR'tI Wllh Ihe nallle of his business wenl inlo Ihe file. AIlPro-'\.'tI. Mr. 1';l!'Sons. who work..'tI for WaMu in s',n Oit:go from about 2002 thfOl.lgh :WOS. said hiS bUllCr'\isors oonstanlly Ilraiscd his performance. -My numbers were thfOl.lgh the roof," he said. On allot her occabioll, Ms. i'..abad askt.'tI a loon officer ror \'erification of an applicant's assets. 'Ibe officer senl a Idlcr from a bank showing a balance of about 5150,000 in the borrower's aecount, she rt't:<ll1et1. But when Ms. i'...aback called the bank to confiml, she lold the halance was only 5s,()(H). 'Ibe Io;m offiCL'f ).....lll'tl at hl'f, Ms. 'i'...aback recalled. "She said, 'We don'l call the bank 10 \'erify:" Ms, Zab:lck said she told Mr. Parsons Ihat she no longer "-anled to work wilh Ihal loon officer, bul he n'llhl'tl: -roo bad." Shortly thef'C",lftL'f, Mr disaj)llCart.--d from the office. Ms. Zaback later learned of hiS arrc:.t for burglar'\ ,md tlmg IlOSSeSSion. -nle shl'Cr ""Orklo;ld al Wa,\lu ensllrt.'tIlhat loan I'l'\iews were limilL'tI. Ms. !'...aback's office Iwd 108 pl'Ollle, 111ld Sl'\-eral hundl'l'tlnl..... files a day. She was l'l'quirt.'tIto Ilrocess ;ltlt';lst 10 files daily. "I'd typically spend a maximum or 35 minutes per file: she said. "It was just dishearlcninl;. ,h.. spit it out and gel it done. That's what they wanled us to do. Garbllge ill, and garlmF,c Oil\." KcferrillFccs for l.AlOIIl." WaMu's boiler room culture flolirisllL'tI in Southern California, where housing prices rose so Tllilidly durin!; lhe huhble thaI creativ.... financing was nl't'tlL'tI to atlr;lct buyers. To that .... nd. WaMu elll!Jr.HL'(l so-called option AlUlls, adjustable rate mOl1gages that entic.... d bOl"l"owers wilh a s.... It't:tion or low initial rat ....s and allowed them 10 dl't:ide how Illuch to PllY each month. But people who opted for minimum payments were underpaying the interest due and adding to their principal, c\'entually causing loan 1',Iyments to balloon. Customers were oneil left wilh the impressioll that low payments would continue long tenn. according to former WaMu sales agcllts. For WaMu, \'ariable-ratc loans - option ARMs, in particular - were L'Spedally attr.ll1.h'e because tht'} I'arrit.<d higher fees than OIher loons. alld allowed WaMu to book profits on inteTCSt P;I\ Ihal borrowers deferred. /l.ccatISC WaMu was selling many of ils loons 10 in\cstors, illhd nO! WOrt)' about defaults: by the time loans went bad, the)' were often m O!ht'r hmuis. WaMu's adjuslable"l11te mortgages expanded from about one-rourth of new home loans m 2003 to 70 I\CTCCnt by 2006. In 2005 and 2006 - when WaMu pushed option ARMs most ag,grcssi\'ely - Mr. Killinger received pay of 519 million and 524 million TCSIJCd.i>'c1y. The ARM Loan Niche 40f7 12130/2008 11: 13 AM Case 1:09-cv-01656-RMC Document 32-2 Filed 09/08/10 Page 15 of 52 Case 1:09-cv-01656-RMC Document 1-1 Filed 08/26/09 Page 16 of 25 The Reckoning - Wai..,lu Buill;1Il I:mpirc on 13:1<1 Loans - Series - NYTime ... hl1p:!lwww.nytimcs.con200lUl212H/husincss/2Hw'llllU.htllll? I' I&sq w, .. 5 on retail office in Downey, C:llif.. sp(.'eializ(:d in selliu!', option ARMs to l';ltino customers who spoke lillIe English :md on :I(kil.'e from real estate brokers. aCl,;ording to a form"r sales agent who requested anonymity bec:wsc he W;IS still in the mortgage business. According to that "genl. WaMu turnl...l real cst:lte into a pipeline for loan applic<ltions hy enabling them to collect "referral fees" for dients who be....:II11C W;IMu borrowers. llnp;rs were typic:dly obli\"lolls 10 agellts' fees. the :I);ent s:lid, :lIlt! <lgents rarely explained the 1();1Il terms, 'Their Realtor was their tnlsled friend," the agent said, -!1le I{e.. ltors would sell them on a minimuill payment, :lIld that W,IS an outright lie: to the the str;ltegy was the hnlinchild ofThonms Ramire7. who oversaw a sales teHm of ahout:w agents at the Downey br,lIlt:h the firstlwlf of this decade, ami now works fur \\',,11.. l\'lr. Ra mi l'ez conIi rmed that he and his tea m enahied real estate a);en ts to t:ulle<:t commissions, but he maintained thaI the fecs wcre fully disclosed, "1 don't think the bank w\luld hu\"e let us do the progl-arn if it was bad," Mr. Ramirez said. tllr. Rnrnireis team sold nenrly $1 billion w011h urloans in 2004, he s:lid. His performalKe made him a pcren nial mcmher of WaMll'S Club, which brought hi); bonuscs and rccognition at .Ill :,wilrds ceremony tYllic;tlly host\.'l.l by Mr. Killingcr in tropical venues like Hawaii. Mr. snccess llrompted WaMu to pOjlul;lte a neighboring lJUilding in Downey with 10;ln processors, underwriters and appmisers who worked ror him. The fees proved so enticing that real estate agents an;v\."{1 in Downey from :11J over Southern Californi;l. bearing and seven loan applications at a time. the fonner agent sait!o W:tMu b,l1lned rcfernll fees in 21106, fearing theyoould be\."tJllstnied as illegal payments from the bank to agents. nut the bank alJow\."{1 Mr. R'llnirczs teallltOl'Ontinue using the rererJ<11 fL-.::s, the agcnt said. Forced 0111 With Millions By 2005, the word was out that WaMu would alX:epl appJientiotls with a mere statement of tbe borrower's income and assets - often with no documentation J"t.'quired - so long as t:rl'llit scores were mk'qllate, according to Ms. Zabaek and other underwriters. "We h"d a flier that s:lid, '/\ thin file is 11 good file:" n..'Calll'<i Michele Culbertson, a wholes1IIe s,des agent with WaMu. M;lI1itlc Lado. an agem in the Irvine, Calif., office, said she coached brokers to leave paris of applications blank to avoid prompting "erilication if the borrower's job or income was sketchy. "We were looking for people who understood how to do loans at WaMu," Ms. Ladosaid. TOPllroduccrs became helllcs. Cr.lig Clark, called the "king of the option ARM" by colleagues, dus\.oJ loans totaling about $1 billion in 2005, according to four of his fomler l"t)Workers, a tally he amassed in J><lrt by challenging anyone who doubled him, "He was a bulldozer when it callle to getting his stuff done," said Lisa Alvarez, who worked in the Irvine office from 2003 to 2006. Christine Crocker, who managed WaMu's wholesale llndelVo'riting division in Irvine, 1213012008 I I : I 3 AM Case 1:09-cv-01656-RMC Document 32-2 Filed 09/08/10 Page 16 of 52 Case 1:09-cv-01656-RMC Document 1-1 Filed 08/26/09 Page 17 of 25 The Reckoning. Wa/\llIlllIilt;m I',mpirc on Bad Loans - Series - NYTimc.. http://www.nytimcs.conV200S/12I2S/busincssl2Swamu.html? r I&sq \1,., une mortga);,c 10 an elderly couple from a broker on 1\1r. Clark's With a ...'t.i in..."Omc of about $3,:.WO a 1lI0nth, the t"Ouple lLt'(.'t.it:d a loan. But thcir bmkcr can1l.'J commissiOlL ufthl'l.'e points by arrJnging an option ARM for them. :lIId did so hy listing their inrome as $7,000 a month. Soon, thcir juml>o.:d frum rou);hly $1.000;\ month to aboul $3.000. C<lusing tht!11l to fall bdund. Mr. Clario:. who now ftJl'" .11'Morgan. refem:d calls to a rompany sllOkcsman. who pro\id...'t.i no further dl.'l.ails. In 2006, WaMu slowed 0l'tioll ARMlellding. But earlier, iJI-oonsiden:d loans had alrcady begun hurting Its Tl'Sults. In 2007, it f'C'COl'ded a $67 mIllion loss and shut down its subprime lendlllg unil. II) the lime shan'holders JOllll't.i WaMu for its annual m... x1ing in Sc3ttle lasl April, had posted a firsHlllart ... "T loss of $1.14 billion and incrcaS(.'d its loan loss rcseT'l'C to $3.5 billion. Its sloo:L had lost more lhan half its \"3I11e in Ihe Ill"l-,....ious two months. NIger was III Ihe aIr Some .shareholders wen' lmte Ihat Mr. Killinl,er and otht."T c....... 'CUth'CS ..'Cre excluding losses from the "'''OlIlputalion of their honu5eS. Others Wl-re enraged that WaMu lun1l'd tkwm an $8-a-share ta1u.'OI'Cr bid from JI'MOIl:an. wCalm down and haw a lillie faith; Mr. Killinger told the crowd. 'We will gl'lthrough lhis: WaMu ask... 'd shareholders to apJlTO\'C a $7 billion im'CSlmenl by Texas Pacific Groull, a Ilrivolle l"(luity firm, and other unnamed ill\"CSIOI'S. 11.,lid Ilond.'nll.ln, a founder ofTexas I'acific a fonner WaMu director, dldined to comment. lloslile shareholders al);ued lhalthc deal would dilute Iheir holdings, but Mr, Killinger foTl.'l't.i it through, saying WllMu dctlperJtcl)' lll'(.'t.il-d new capital. Wt:eks later, with War-Iu in tatters, diTl"CIQrs stripped Mr. of his board chainmmship. And tht! h'll1k bo..'gan including mortgage losses when calculating cx... cutil'e bonus...'S. In September, Mr, Killillger was fOIl,;ed to retire. that month. with War-Io bockling under roughly $180 hi Ilion in lIIortgage-relall.'d 1011l1S, regulators seized lhe bauk and sold itto,JI'Mnrgan for $I.l) billion, a frJt1ion of the $40 billion vllluation the stock l11'1rket Rave WaMu at ils pc;lk. tlillions Ih;lt had pluwt't.i into WaMu were wiped out, as were I)TOSjJl'Cts for UHUly of the bank's 50.non emploYl'CS. UUI Mr. Killinger still had his millions. rankling laid-otT workcrs and sharehulders alike. "Kerr)' has over $IOU million O\'Cr his tenure baSt.'t.i on the aggressiveness that sunk the compmly: said Mr. Au, the money manager. "lIo\\' does he justify takillg that nlOn... ')'?" In June, Mr.I\U sent all e-mail message to the rompanyasking executivcs to return some of their pay. lIe says he has not heard back, 6 of? '" __Ol or-. _ -"'"on pntIl on c.:........ 2$ 2038 on _""Ol,._Vert_ Mo.e Art>t.les In BUSIness 12/30/2008 II: 13 AM Case 1:09-cv-01656-RMC Document 32-2 Filed 09/08/10 Page 17 of 52 Case 1:09-cv-01656-RMC Document 1-1 Filed 08/26/09 Page 18 of 25 The Reckoning - WaMu Buill an Empire on Bad Loans - Series - NYTimc... http://www.nytimcs.coml2008/12I28/business/28wamu.html?_r'" I &sq""w.'0 Put Co'.ll. . '" .. , U' ..In, , 'I'I., '.,1, I, ... 1.1., ,"',,,, 11'> , ... \ I> , ,"T" ... \,,.1 h-. .,. \\ oJ. . (W=lbr< ' ... 2008) I.. .. ,,, '!",,,.J ..... )I.'"... 1\ <>-IE o.-E__ o.-E__ INSIDE -'""'J:'MI. f" ,'1\, 11101 1'11. :,,"''' fk." TEI..E\oGON ...n",,_ I. "" I_ (;,,,.,.. , " ..- Continue Reading>>: I.n,._ ,."'" 'In,o.II""H I""" ' OPNCN. 1'>1."", I.. 11... llru... \"'rhn 1'''1"",. I""" ,I )"Orh"'lh "rolin"n 1>1..... OPN(lN. Editorial ;.J()tcho()k "IV IIIEliON. I'EALT". .. I",,' n 1.,II'I"'ho:)" __ us NYIIl...... e.- l......-w sa-. _ Sl'O"b osw- ...... T,'" ..leO. _E__ a_lOT"" 70D 12130/2008 11: 13 M...I Case 1:09-cv-01656-RMC Document 32-2 Filed 09/08/10 Page 18 of 52 Case 1:09-cv-01656-RMC Document 1-1 Filed 08/26/09 Page 19 of 25 Exhibit A-1 To Proof of Claim of Deutsche Bank National Trust Company Agreement Original Collateral Current Principal Issue 10 Tnllls:lction Series Dale Uahlllcc Balance 9125/08 L130002 1.011" BC':!ch l.oan Trust 2000-1 1211I00 1,000,000.594.71 34.811,895.51 LBOOFI Deach Ilome E, uilY Loan Trust 2000-LB I 8/1/00 1.312,248,898.65 59,532,662.65 L130101 Beach Loan Trust 2001-1 3/1/0 I 725.466,488.78 36,039,908.53 LBO I 02 Beach Mortnagc Loan Trust 2001-2 7/]/01 1.594.353,660.72 71,505,949.50 LBOI03 Lone Beadl Mortgage l.oan Trust 2001-3 911/01 1,001,006,145.53 49,540,692.95 I.BOI 04 l.otH!, Bl.'ach MOrll.\a!!.l' LOlln Trust 2001-4 12/1/01 1,999,995.140,51 104550975.6 LB0201 LOll.1! Beach Mort 'a"c LOlll1 Trust 2002-1 4/1/02 1,600,002,996.85 78,50 I, 73?.67 LU0202 LOll' Beach Mort 'auc Loan Trust ?002-2 6/1/0? 1,000,001,438.60 52,95 I,722.09 1.110205 1.011" Beach Mort",age Loan Trust 2002-5 11/1/02 1,000.000.848.34 73,845,139.93 LU0301 LOll" Beach Mort 'auc Loan Trust 2003-1 211/03 2.000,000.169.33 130,090,598.75 LB0302 Lon' Beach Mort",;ll!.e Loan Trust 2003-2 411/03 926,370,950.24 63,358.995.33 LB0303 1.011 0 Beach Mort 'auc Loan Trust 2003-3 611/03 900.000,208.99 75,119,530.93 LB0304 Lon.g Beach Mort ',agc Loan Trust 2003-4 711/03 ?,200,000,305.17 224.438,308.88 L130401 Lono Bcach Mortgauc Loan Trust 2004-1 2/1/04 4,500,000,018.86 532,202.224.67 LB0402 Long Beach Mort ',age Loan Trust 2004-2 5/1/04 1,519,139,252.43 204,931.765.30 1.130403 Long Beach Mort ',age: Loan Trust 2004-3 6/1/04 1.999,383,410.65 292,775.378.36 LB0404 Lon' Beach MOl1"auc Loan Trust 20044 9/1/04 2,719,328,087.12 386,675,678.52 LB0405 Lon!!, Beach Mort"auc Loan Trust 2004-5 811104 1,015,407,092.63 151,014,830.26 LB0406 Long Beach Mort"a"c Loan Trust 2004-6 10/1/04 1,104,297,532.58 165,563,241.68 LB0501 Lonl!. Beach Mort 'aoe Loan Trust 2005-1 1/1105 3,500,003,000.56 581,873,653.66 LB0502 Lon' Beach Morum'c Loan Trust 2005-2 411/05 2,500,002,732.02 485,463,232,28 Case 1:09-cv-01656-RMC Document 32-2 Filed 09/08/10 Page 19 of 52 Case 1:09-cv-01656-RMC Document 1-1 Filed 08/26/09 Page 20 of 25 Exhibit A-1 To Proof of Claim of Deutsche Bank National Trust Company Agreement Original Coll:ltcral Current Principal Issue 10 Transaclion Series Dale Balance Dahlllcc 9/25/08 LHOS03 Beach Mortv,agc Loan Trust 2005-3 9/1/05 1.527.819.573.20 496.077.274.56 LB05WI LOllg Deach Mon!!.:!gc Loan Trust 2005-WLI 7/112005 2,783.633.153.00 624.023.514.56 l,B05W2 LOlIg Beach Mortgage Loan Trust 2005W12 8/1105 2.755.716.668.32 791.199.316.92 1.005W3 Long Beach Mong:ly,c Loan Trust 2005-WL3 1111/05 2.191.257.007.17 827.566,265.49 LB0601 Lon' Beach Mortgage Loan Trust 2006-1 211106 2.499,987.903.06 1,160.361,979.44 I,B0602 Long Beach Mortgage Loan Trust 20062 3/1/06 3.003.799.169.81 1.386.914,706.65 I..H0603 LOllg Beach Mon!-\:lgc Loan Trust 2006-3 4/1106 1.743.796,134.40 888.155.925.30 1.130604 1.011" Ik,ICh Monuagc 1.0.111 Trust 2006-4 5/1/06 1.922.678.765.19 1.053.549.54 7 .12 1.00605 Lon!!, n ...ach l.oan Trust 2006-5 6/1/06 1.925.001.176.58 1.061,9 7 4.757.27 1.130606 I.Oll!!, Ikach MOr1!!.a 'c Loan Trusl 2006-6 7/1/06 1.688.107,433.24 1.031,620.844.36 1.00607 LOll!:! 1),..'ICh Mort 'a 'C Loan TruSI 2006-7 8/1/06 1596.611,009.81 1,066,308,386.86 1.00608 OCllch MOrl"ll"C Loan Trusl 2006-8 9/1/06 1.380,727,06 7 .40 954,086,893.15 LB0609 LOll' Dcach Mortea 'C Loan TruSI 2006-9 10/1/06 1.520,086,184.10 1,091,628.311.24 LB060A LOll!!, Bcach Mort!!,llt\c Loan Trusl 2006-A 5/1/06 532,619,585.98 144,205.711.88 1.130610 LOll!!. BCllch Morl.!!.a 'c Loan Trusl 2006-10 11/1/06 1,008.199,873.58 740,325,465.511 LB0611 LOllI!. Dc,u.:h Mortea 'C Loan Trust 2006-11 12/1/06 1,499,999,921.58 1.126,024,144.81 I.B06WI Lon" Beach MOrl!!"tgc Loan Trusl 2oo6-WLI 1/1/06 1.903.659,401.04 810,309.534.48 LB06W2 Lon.!!. Bc,lch Morl"a"c Loan Trust 2006-WL2 1/1106 1.908,950,760.04 739,358.759.85 LB06W3 Lon!!, BCilch MOrl"a 'e Loan Trust 2006-WLJ 111106 1,917,874,232.74 737,068,803.57 WashinglOn Mutual MOrlgage WAoool Securitics Corn. 2000-1 3/3 1/00 6,701,536,869.34 480,305,038.41 Washington Mutual Mortgage WA0107 Securities Corp. 2001-7 5/1/01 1,051,032,555.94 19,541,729.02 Washinglon Mutual Mortgage WAOIA3 Securities Corp. 200IAR) 11/9/01 1.167,350,333.57 32,739.901.70 Case 1:09-cv-01656-RMC Document 32-2 Filed 09/08/10 Page 20 of 52 Case 1:09-cv-01656-RMC Document 1-1 Filed 08/26/09 Page 21 of 25 Exhibit A-1 To Proof of Claim of Deutsche Bank National Trust Company Agreement Original Collateral Current Ilrillciplil Issue ID Tr;llIs,lction Series Dale Balallce Balance 9125/08 Washington MUlual Mortgage WA02A2 Securities Corp. 2002-AR2 2126/0" 846,869,196.58 133,386,070.04 Washington MUlual Mortgage W1\021\6 Sccurilks Com. 2002-I\R6 511/02 976,270,151.47 33,967,22?14 W;lshinglon Mulu;ll Mortg,lgC WI\021\9 Securities Corp. 2002-AR9 7/1/02 [,497,233.409.59 63,032,301.89 Washington Mutual Mortgage WAUlAe Securities Corp. 2002-I\R12 911/0'" 998,7')4,014.44 7.164.395.08 Washington MUlual Mortgage WI\021\D Securities Com. 2002-i\1{ 13 9/1/02 80 I,90 1,920.87 6,622,003.44 Washington Mutual Mortgage WI\O"I\[ Securities Corn. 2002-I\R14 10/25/02 1.028,589,782.28 10,938.312.60 Washington Mutual M0I1gage WA02AF Securities Corp. 2002-AR 15 1011/02 1,975.024,800.28 22,477,420.27 Washington Mutual Mortgage WA07AG Securities Corn. 2002-AR 16 1011102 1,030,719,967.88 21,216,427.56 Washington Mutual Mortgage WA02AI-l Securities Corp. 2002-AR 17 1011102 1,141,838,488.95 59,353,086.07 Washington Mutual M0I1gage WA02AI Securities Corp. 2002ARt8 1111102 1,995,977,878.00 48,423,693.51 Washington Mutual Mortgage WA02AJ Securities Corn. 2002-AR19 1211102 1,999,854,039.48 47,816.425.15 WAOHI Washin\!.ton Mutual Bank FA 2002-PR1 9127/02 $1,810.000.000.00 $412,182,199.00 WAO"'T2 Washin 'ton Mutual Bank FA 2002-PR3 11126/02 $1,569,403,402.00 $460,528,036.14 Washington Mutual Mortgage WA03A] Securities Com. 2003-AR 1 1/1/03 1,929,958,305.53 78,084,582.05 Washington Mutual Mortgage WA03A2 Securities Corp. 2003-AR2 2/1/03 453,072,396.92 14,354,070.03 Washington Mutual Mortgage WA03A3 Securities Corp. 2003AR3 2/1/03 1,498,678,348.09 76,606,402.47 Washington Mutual Mortgage WA03A4 Securities Com. 2003-AR4 3/1/03 1,248,537,577.61 96,324,730.77 Washington Mutual Mortgage WA03A5 Securities Corp. 2003-AR5 4/1/03 ],497,993,405.95 191,453,076.81 Washington Mutual Mortgage WA03A6 Securities Corp. 2003-AR6 5/1/03 ],817,570,225.97 273,859,507.75 Washington Mutual Mortgage WA03A7 Securities Com. 2003-AR7 6/1/03 1,782,734,144.99 330,974,020.39 Washington Mutual Mortgage WA03A8 Securities Com. 2003-AR8 711103 1,249,964,133.60 306,284,588.45 Washington Mutual Mortgage WA03A9 Securities CorP. 2003-1\R9 8/1/03 1,499,961,494.15 459,523,660.91 Case 1:09-cv-01656-RMC Document 32-2 Filed 09/08/10 Page 21 of 52 Case 1:09-cv-01656-RMC Document 1-1 Filed 08/26/09 Page 22 of 25 Exhibit A-1 To Proof of Claim of Deutsche Bank National Trust Company Agreemellt Origillill Collateral CurrclIll'rinciplil Issue 10 Transaction Series Dille Ualancc 8alance 9125/08 Washington Mutual Mongilgc W1\031\/\ Securities Corp. 2003-I\R 10 911/03 2.149,945.638.93 758,972.394.10 Washingtoll MUlual Mortgage WA03l\B Securities Com. 2003-AR II 10/1/03 569,335,006.37 201,418.222.95 Washington Mutual Mortgage WA03l\C Securilil'S Com. 2003-AR12 12122/03 624,366,307.97 169.054.089.25 Washington Mulual Mongagc WADI" 1 Securities Corp. 1004-1\1{ I 2/12104 549,954,684.34 184.779,040.96 Washington Mutual MOl1gagc WI\()4A2 S c c l l r i l i c ~ Corn. 2004-AR2 4128/04 607.568.701.01 75,847.329.67 Washington Mutual Mortgage WAG41\) S('curilics Com. 2004-AR3 4/27/04 1,199,094.712.64 627.200,249.89 Washington Mutual Mortgage W1104114 Securit ies Corp. 2004-IIR4 5125/04 999,949,639.60 640.104,266.85 Washington Mutual MOJ1gage W1104115 Securities Corn. 2004-IIR5 5125/04 324,778,296.44 319.246,042,00 Washington Mutual Mongllge W1104116 Securities Cor). 2004-AR6 5127/04 694,961,493.88 120,471,550.20 Washington Mutual Mong<lge W1104117 Sec.:urities Corp. 2004-AR7 6124/04 899,173,380.28 557,746,399.24 Washington MUtulll Mortgage W1104118 Securities Corn. 2004-IIR8 6/25/04 763,8?4,537.00 135,742,545.16 Washington Mutual Mortl;age W11041111 Securities Corp. 2004-IIRIO 7/27/04 1.264,666.962.70 243,688,955.92 Washington Mutual MOl1gagc W1I0411C Securities Corp. 2004-IIR 12 10/26/04 1,784,625,919.86 340,395,443.18 W<lshinglOn Mutual Mortgage W1I0411D Securities Corn. 2004-IIR13 11/23/04 1,539,705,677.27 325,216,452.97 Washington Mutual MOl1gage W1105111 Securities Corp. 2005-AR 1 1/18/05 2.971,414,173.32 714,587.307.20 Washington Mutual Mortgage WA05A2 Securities Corp, 2005-AR2 1126/05 3,267,405,771.83 920,722,624,68 Washington Mutual Mortgage WA05A4 Securities Com. 2005-AR4 3/24/05 750,504,106.41 506,442,449.82 WashinglOll Mutual Mongage WA05A6 Securities Corp. 2005-AR6 4126/05 3,167,184,178.32 932,737,574.84 WashinglOn Mutual Mortgage WA05A8 Securities Corp. 2005-AR8 7/15/05 3,029,599,417.91 893,576,756.98 Washington Mutual Mongage WII05119 Securities Com. 2005-AR9 7/21/05 1,505,402,999.34 423,68 I,934.44 Washington Mutual Mongage WA05AA Securities Corp. 2005-AR10 8/25/05 3,201,069,294.58 I, I04, 192,858.61 WA05AB WaMu Asset Acceptance Corp. 2005-AR13 10/25/05 3,90 I,265,905.06 1,555,245,023.74 Case 1:09-cv-01656-RMC Document 32-2 Filed 09/08/10 Page 22 of 52 Case 1:09-cv-01656-RMC Document 1-1 Filed 08/26/09 Page 23 of 25 Exhibit A-1 To Proof of Claim of Deutsche Bank National Trust Company Agreement Original Collateral Current Principal Issue 10 TnlllSllcliol1 Series O;ltc Balance Balallce 9nS/08 WI\05AC W,IMu Asset A(,;cCplllllCC Corp. l005-AR 16 11123/05 9 7 4,385,186.87 709,012,720.73 WI\05!\D WaMul\ssct Acccolancc Com. lOOS-ARI8 12129/05 767,442,752.54 759,313.543.32 Washington Mutual 1I0ille Equity WI\0601 Trust I 31712006 5,389.459,150.00 3,561,666,083.13 Wl\0602 WaMu 2006-01\ I 12/1312006 2,736,034,892.85 1,376.479,667.76 W1\061\ 1 WaMu Asset ACccotlltlCC Com. 200G-AR I 1/30/06 1,516.188,758.27 719,35?,278.04 W1\061\3 WaMu Asset Acceptance Corp. 2006-AR3 2123/06 1.019.582,771.26 512,708.347.22 Washingtoll Mutual MOl1gagc W1\061\4 Securities Com. 2006-AR4 4/25106 932,087,563.09 474,865,940.42 WA06A5 WaMu Asset Acccnlallce Com. 2006-AR5 5/25/06 796,522, I88.53 481,442,704.76 One Revolving Pool WA06C[ WM Covered Bond Prooral11 I 5/18/07 ror all Series One Revolving Pool WA06C2 WM Covered Bond Proor,un 2 5/18/07 ror all Series WA0701 WaMu 2007-Flcx I 10/25/2007 5,199,147,685.89 4,067,805,919.38 One Revolving Pool WA07C3 WM Covered I30nd Program 3 5/18/07 ror all Series WA071[1 WllMu Asset Acccptance Com. 2007-HEI 111/07 1,393,794,25 [.58 1,096,561,655.17 C09201 COllst Federal 1992-1 811/92 374,[06,546.77 17,992,505.24 D89902 Ace Securities 19992 7/1/99 416.860,972.94 9,435.113.28 MSOOOI Moroan Stanley ABS Canital [ Inc. 2000-1 711/00 360,107,788.57 7,463,097.13 GS06Ll GSAMP Trust 2006-S I 111/06 516,812,864.78 122,133,901.15 GS05X2 GSAMP J'ruSI 2005-S2 Case 1:09-cv-01656-RMC Document 32-2 Filed 09/08/10 Page 23 of 52 Case 1:09-cv-01656-RMC Document 1-1 Filed 08/26/09 Page 24 of 25 Exhibit A-2 To Proof of Claim of Deutsche Bank National Trust Company Lurrcnl Issue ID Trullsaclion Series Agreement Dlile I)rincinal Dal:lIlcc LB05NJ Lon!.: Beach Asset Iioldin Corp. eI2005-WLI 10/2112005 70.367,411.73 LB05N4 LOll" Ikach Asset lIatdin ' Corp. eI2005W1.2 I)nl2005 12,747.551.05 LB05N6 Long Bt:,ICh Asset Ilolding Corp. eI2005-WLJ 1217/2005 20,387,875.63 Ll306N6 Lon.. I3C:ICh Asset flolding Corp. el 2006-3 41'2:612006 77,879.138.01 LB06N7 Long B('ach CI NIM Notes 20064 513012006 32.297.749.83 LB06N8 Long Beach CI NIM Notes 2006-5 6/3012006 31,437.470.34 L1J06N9 LOll!.!, Bl.'ach CI NIM NOles 2006-6 7/3112006 27.629.292.83 L1306NA Lon!!, Ikach CI NIM NOles 2006-7 8/31!2006 33,011.254.77 LB06NB Long, Beach CI NIM NOles ')006-8 9/2712006 24,248,851.46 LB06NC Lon1'. Beach CI NIM Notes 1006-9 1013012006 39.191.206.64 L1306ND LOll!!. Beach CI NIM Notes 2006-10 1112912006 26.473,498.22 LB06NE Long Bcach CI NIM Notes 2006-11 1212712006 40,894,919.43 WA07NI WaMu CI NIM NOles 2007-WM 1 1/30/2007 30,502,4 16.51 LB03Pl (LB03PB) Lon!.! Beach Securilies Com. 20031'1 (2003W5) 4/30/03 TBD LB03P2 Long BCilch Securities Corp. 2003-W9 6/26/03 TBD I.B04N2 Lon}!, Beach Asset Iioidin J Corp. 20042 5/26/04 TOD LB04N4 Lon.1!. Bcach Asset Iioidin J Corp. 2004-4 11124/04 5,755,410.65 LB04N6 Lon" Beach Asset Iioidin" Corp. "004-6 10/29/04 9,158,820.66 LB05N2 L o n ~ Beach Assel Iioidin" Coru. 2005-2 4126/05 15,457,776.33 L1305N5 Lonl! !lcach Asset Holdin" Com. 2005-3 9120/05 8,131,609.43 L1306N2 Lonl! !leach Asset I-Ioldin o Coru. 2006-WL2 3/3012006 43,959,237.65 LB06N4 Lonl! Beach Asset Holdinl! Corn. 2006-1 2/28/06 41,252,394.94 LB06N5 Lonl!. Beach Asset Holdin" Corn. 2006-2 3/30/00 55,779,764.27 LB07P3 Lonl!. Beach Asset Holdinl!S Corn CI 2003-3 11/16/07 TBD LB07P4 Long Beach Asset Holdings Corp CI 2003-4 11/16/07 TBD Case 1:09-cv-01656-RMC Document 32-2 Filed 09/08/10 Page 24 of 52 Case 1:09-cv-01656-RMC Document 1-1 Filed 08/26/09 Page 25 of 25 Exhibit A-3 To Proof of Claim of Deutsche Bank National Trust Company Issue II) Transaclioll Date LB03CM LOll!!, Ik;lCh MOl11!;I1,t.C COllllKUlY Custodial A"rccmcnt 10/15/2003 FB022C ASSI: r BACKED SECURITIES CORP. 2002-IIE3 10/1/2002 FB050C CKI:DIT SUiSSE FIRST BOSTON BII)I\R rv 6/112005 GC04FC (iREI:NWICII/DB FilA. VA AND CONVENTIONAL 512012004 GC().IJC 2004-RPI 512012004 GC056C GREENWICII RI3SGC 2005RPI 2/112005 GS04WC GOLDMAN/LONG BEACH WAREHOUSE 12/lnOO4 GS052C GOI.DMAN!WI\511INGTON MUTUAL CUSTODY WAREJ-IO 11112005 GS05CC GSAA 20057 SECURITY CUSTODY ONLY 61112005 GS063C GSAA 2006-1 CUSTODY ONI. Y 6/1/2006 GS06FC GSR lOOG-SF CUSTODY ONLY 5/112006 GS0611C GSR 2006 6F CUSTODY ONLY 6/112006 GS06MC GSR 2006-8F CUSTODY ONLY SECURITY 8/1/2006 GS06RC GS\{ 2006-9F CUSTODY ONLY 10/112006 GS078C GSR 20072F CUSTODY ONLY 3/112007 GS07BC GSR 2007-3F CUSTODY ONLY 4/112007 GS07EC GSR 2007-4F CUS roDY ONLY 6/112007 LB032C LONG BEACH/FANNIE MAE 1'001.5 5/1/2007 l.B052C WASJ [INGTON MUTUALJLBMC REPO FACILITY 6122/2005 L11012C LEIIMANrnIORNBURG-SASCO 2001-8A 5/1/2001 L1107EC LEIIMANI SASCO 2007GEL2 4/112007 MS02BC MORGAN STANLEY 2002-WLI BANK ONE TRUSTEE 6/112002 MS02JC MORGAN STANLEY/LONG BEACH 10/112002 MS03EC MORGAN STANLEY WAMU 91112003 MS045C MORGAN STANLEY FANNIE MAE 312312004 MS04GC MORGAN STANLEY FREDDIE MAC 8/1812004 WA071C WASlllNGTON MUTUAL WAMU 2007-1-1[2 4/1012007 WA072C WASIIINGTON MUTUAL WAMU 2007-I-IE3 5/10/2007 WA073C WASIIJNGTON MUTUAL WAMU 2007-1-IE4 6/1312007 Case 1:09-cv-01656-RMC Document 32-2 Filed 09/08/10 Page 25 of 52
EXHIBIT 4
Electronic Version of Agreements: filed in CD-Rom format Case 1:09-cv-01656-RMC Document 32-2 Filed 09/08/10 Page 26 of 52
EXHIBIT 5 Case 1:09-cv-01656-RMC Document 32-2 Filed 09/08/10 Page 27 of 52 SE 2144624 v5
MORTGAGE LOAN PURCHASE AGREEMENT This is a Mortgage Loan Purchase Agreement (the Agreement), dated February 24, 2006, between Long Beach Securities Corp., a Delaware corporation (the Purchaser) and Long Beach Mortgage Company, a Delaware corporation (the Seller). Preliminary Statement The Seller intends to sell certain mortgage loans and the swap agreement to the Purchaser on the terms and subject to the conditions set forth in this Agreement. The Purchaser intends to deposit the mortgage loans and the swap agreement into a mortgage pool constituting the trust fund. The trust fund will issue asset backed certificates designated as Long Beach Mortgage Loan Trust 2006-2 Asset-Backed Certificates, Series 2006-2 (the Certificates). The Certificates will consist of twenty-one classes of certificates. The Certificates will be issued pursuant to a Pooling and Servicing Agreement, dated as of March 1, 2006 (the Pooling and Servicing Agreement), among the Purchaser, as depositor, Deutsche Bank National Trust Company, as trustee (the Trustee) and the Seller, as master servicer (in such capacity, the Master Servicer). Capitalized terms used but not defined herein shall have the meanings set forth in the Pooling and Servicing Agreement. The parties hereto agree as follows: SECTION 1. Agreement to Purchase. The Seller agrees to sell, and the Purchaser agrees to purchase, on or before March 7, 2006 (the Closing Date), certain fixed-rate and adjustable-rate residential mortgage loans (the Mortgage Loans) and a swap agreement, dated March 7, 2006 between Washington Mutual Bank and Bank of America, N.A. (the Counterparty) as set forth on Schedule A attached hereto (the Trust Swap Agreement). The Trust Swap Agreement will be novated to the Seller pursuant to a novation dated as of March 7, 2006, among the Counterparty, WMB and the Seller. The Trust Swap Agreement will be novated to the Purchaser pursuant to a novation dated as of March 7, 2006, among the Counterparty, the Seller and the Purchaser. SECTION 2. Mortgage Loan Schedule. The Purchaser and the Seller have agreed upon which of the mortgage loans owned by the Seller are to be purchased by the Purchaser pursuant to this Agreement on the Closing Date and the Seller shall prepare or cause to be prepared on or prior to the Closing Date a final schedule (the Closing Schedule) that shall describe such Mortgage Loans and set forth all of the Mortgage Loans to be purchased under this Agreement. The Closing Schedule shall conform to the requirements set forth in this Agreement and to the definition of Mortgage Loan Schedule under the Pooling and Servicing Agreement. The Closing Schedule shall be the Mortgage Loan Schedule under the Pooling and Servicing Agreement. Case 1:09-cv-01656-RMC Document 32-2 Filed 09/08/10 Page 28 of 52 Exhibit 5 - Section 6 of MLPA, LB0602 02/26/06 SE 2144624 v5
8 (ix) Each Mortgage Note, each Mortgage, each Assignment and any other document required to be delivered by or on behalf of the Seller under this Agreement or the Pooling and Servicing Agreement to the Purchaser or any assignee, transferee or designee of the Purchaser for each Mortgage Loan has been or will be, in accordance with Section 4(b) hereof, delivered to the Purchaser or any such assignee, transferee or designee. With respect to each Mortgage Loan, the Seller is in possession of a complete Mortgage File in compliance with the Pooling and Servicing Agreement, except for such documents that have been delivered (1) to the Purchaser or any assignee, transferee or designee of the Purchaser or (2) for recording to the appropriate public recording office and have not yet been returned; (x) The Seller (A) is a solvent entity and is paying its debts as they become due, (B) immediately after giving effect to the transfer of the Mortgage Loans, will be a solvent entity and will have sufficient resources to pay its debts as they become due and (C) did not sell the Mortgage Loans to the Purchaser with the intent to hinder, delay or defraud any of its creditors; and (xi) The transfer of the Mortgage Loans to the Purchaser at the Closing Date will be treated by the Seller for financial accounting and reporting purposes as a sale of assets. SECTION 6. Representations and Warranties of the Seller Relating to the Individual Mortgage Loans. The Seller hereby represents and warrants to the Purchaser, that as of the Closing Date with respect to each Mortgage Loan: (i) The information set forth on the Mortgage Loan Schedule with respect to each Mortgage Loan is true and correct in all material respects as of the Cut-off Date, unless another date is set forth on the Mortgage Loan Schedule; (ii) [reserved]; (iii) Each Mortgage is a valid and enforceable first or second lien on the Mortgaged Property, including all improvements thereon, subject only to (a) the lien of non-delinquent current real property taxes and assessments, (b) covenants, conditions and restrictions, rights of way, easements and other matters of public record as of the date of recording of such Mortgage, such exceptions appearing of record being acceptable to mortgage lending institutions generally or specifically reflected in the appraisal made in connection with the origination of the related Mortgage Loan and which do not materially interfere with the benefits of the security intended to be provided by such Mortgage, (c) other matters to which like properties are commonly subject which do not materially interfere with the benefits of the security intended to be provided by such Mortgage and (d) in the case of a second lien, only to a first lien on such Mortgaged Property; Case 1:09-cv-01656-RMC Document 32-2 Filed 09/08/10 Page 29 of 52 SE 2144624 v5
9 (iv) Immediately prior to the assignment of the Mortgage Loans to the Purchaser, the Seller had good title to, and was the sole legal and beneficial owner of, each Mortgage Loan, free and clear of any pledge, lien, encumbrance or security interest and has full right and authority, subject to no interest or participation of, or agreement with, any other party to sell and assign the same. The form of endorsement of each Mortgage Note satisfied the requirement, if any, of endorsement in order to transfer all right, title and interest of the party so endorsing, as noteholder or assignee thereof, in and to that Mortgage Note; and each Assignment to be delivered hereunder is in recordable form and is sufficient to effect the assignment of and to transfer to the assignee thereunder the benefits of the assignor, as mortgagee or assignee thereof, under each Mortgage to which that Assignment relates; (v) To the best of the Sellers knowledge, there is no delinquent tax or assessment lien against any Mortgaged Property; (vi) There is no valid offset, defense or counterclaim to any Mortgage Note (including any obligation of the Mortgagor to pay the unpaid principal of or interest on such Mortgage Note) or the Mortgage, nor will the operation of any of the terms of the Mortgage Note and the Mortgage, or the exercise of any right thereunder, render the Mortgage Note or the Mortgage unenforceable, in whole or in part, or subject to any right of rescission, set-off, counterclaim or defense, including the defense of usury and no such right of rescission, set-off, counterclaim or defense has been asserted with respect thereto; (vii) To the best of the Sellers knowledge, there are no mechanics liens or claims for work, labor or material affecting any Mortgaged Property which are or may be a lien prior to, or equal with, the lien of the related Mortgage, except those which are insured against by the title insurance policy referred to in (xi) below; (viii) To the best of the Sellers knowledge, each Mortgaged Property is free of material damage and is at least in average repair; (ix) Each Mortgage Loan at origination complied in all material respects with applicable local, state and federal laws, including, without limitation, predatory and abusive lending, usury, equal credit opportunity, real estate settlement procedures, truth- in- lending and disclosure laws, and consummation of the transactions contemplated hereby, including without limitation the receipt of interest does not involve the violation of any such laws; (x) Neither the Seller nor any prior holder of any Mortgage has modified the Mortgage in any material respect, satisfied, canceled or subordinated such Mortgage in whole or in part; released the related Mortgaged Property in whole or in part from the lien of such Mortgage; or executed any instrument of release, cancellation, modification or satisfaction with respect thereto (except that a Mortgage Loan may have been modified by a written instrument signed by the Case 1:09-cv-01656-RMC Document 32-2 Filed 09/08/10 Page 30 of 52 SE 2144624 v5
10 Seller or a prior holder of the Mortgage Loan which has been recorded, if necessary, to protect the interests of the Seller and the Purchaser and which has been delivered to the Purchaser or any assignee, transferee or designee of the Purchaser as part of the Mortgage File, and the terms of which are reflected in the Mortgage Loan Schedule); (xi) A lenders policy of title insurance together with a condominium endorsement and extended coverage endorsement, if applicable, and, with respect to each Adjustable Rate Mortgage Loan, an adjustable rate mortgage endorsement in an amount at least equal to the balance of the Mortgage Loan as of the Cut-off Date or a commitment (binder) to issue the same was effective on the date of the origination of each Mortgage Loan, each such policy is valid and remains in full force and effect, the transfer of the related Mortgage Loan to the Purchaser and the Trustee does not affect the validity or enforceability of such policy and each such policy was issued by a title insurer qualified to do business in the jurisdiction where the Mortgaged Property is located and acceptable to Fannie Mae or Freddie Mac and in a form acceptable to Fannie Mae or Freddie Mac on the date of origination of such Mortgage Loan, which policy insures the Seller and successor owners of indebtedness secured by the insured Mortgage, as to the first or second, as the case may be, priority lien of the Mortgage; to the best of the Sellers knowledge, no claims have been made under such mortgage title insurance policy and no prior holder of the related Mortgage, including the Seller, has done, by act or omission, anything which would impair the coverage of such mortgage title insurance policy; (xii) Each Mortgage Loan was originated by, or generated on behalf of, the Seller, or originated by a savings and loan association, savings bank, commercial bank, credit union, insurance company or similar institution which is supervised and examined by a federal or state authority, or by a mortgagee approved by the Secretary of Housing and Urban Development pursuant to Sections 203 and 211 of the National Housing Act; (xiii) With respect to each Adjustable Rate Mortgage Loan, on each Adjustment Date, the Mortgage Rate will be adjusted to equal the Index plus the Gross Margin, rounded to the nearest 0.125%, subject to the Periodic Rate Cap, the Maximum Mortgage Rate and the Minimum Mortgage Rate. The related Mortgage Note is payable on the first day of each month in self-amortizing monthly installments of principal and interest (unless such Mortgage Loan is a mortgage loan that requires the payment of interest only with respect to some or all of the related monthly payments as indicated on the Mortgage Loan Schedule), with interest payable in arrears, and requires a Monthly Payment which is sufficient to fully amortize the outstanding principal balance of the Mortgage Loan over its remaining term and to pay interest at the applicable Mortgage Rate. No Mortgage Loan is subject to negative amortization. All rate adjustments have been performed in accordance with the terms of the related Mortgage Note or subsequent modifications, if any; Case 1:09-cv-01656-RMC Document 32-2 Filed 09/08/10 Page 31 of 52 SE 2144624 v5
11 (xiv) To the best of the Sellers knowledge, all of the improvements which were included for the purpose of determining the Value of the Mortgaged Property lie wholly within the boundaries and building restriction lines of such property, and no improvements on adjoining properties encroach upon the Mortgaged Property; (xv) All inspections, licenses and certificates required to be made or issued with respect to all occupied portions of the Mortgaged Property and, with respect to the use and occupancy of the same, including but not limited to certificates of occupancy, have been made or obtained from the appropriate authorities and to the best of the Sellers knowledge, the Mortgaged Property is lawfully occupied under applicable law; (xvi) All parties which have had any interest in the Mortgage, whether as mortgagee, assignee, pledgee or otherwise, are (or, during the period in which they held and disposed of such interest, were) in compliance with any and all applicable licensing requirements of the laws of the state wherein the Mortgaged Property is located; (xvii) The Mortgage Note and the related Mortgage are genuine, and each is the legal, valid and binding obligation of the Mortgagor enforceable against the Mortgagor by the mortgagee or its representative in accordance with its terms, except only as such enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforcement of creditors rights generally and by law. To the best of the Sellers knowledge, all parties to the Mortgage Note and the Mortgage had full legal capacity to execute all Mortgage Loan documents and to convey the estate purported to be conveyed by the Mortgage and each Mortgage Note and Mortgage have been duly and validly executed by such parties; (xviii) The proceeds of each Mortgage Loan have been fully disbursed, there is no requirement for future advances thereunder and any and all requirements as to completion of any on-site or off-site improvements and as to disbursements of any escrow funds therefor have been complied with. All costs, fees and expenses incurred in making, closing or recording the Mortgage Loans were paid; (xix) The related Mortgage contains customary and enforceable provisions which render the rights and remedies of the holder thereof adequate for the realization against the Mortgaged Property of the benefits of the security, including, (i) in the case of a Mortgage designated as a deed of trust, by trustees sale, and (ii) otherwise by judicial foreclosure. There is no homestead or other exemption available to the Mortgagor which would interfere with the right to sell the Mortgaged Property at a trustees sale or the right to foreclose the Mortgage; (xx) With respect to each Mortgage constituting a deed of trust, a trustee, duly qualified under applicable law to serve as such, has been properly Case 1:09-cv-01656-RMC Document 32-2 Filed 09/08/10 Page 32 of 52 SE 2144624 v5
12 designated and currently so serves and is named in such Mortgage, and no fees or expenses are or will become payable by the Purchaser to the trustee under the deed of trust, except in connection with a trustees sale after default by the Mortgagor; (xxi) There exist no deficiencies with respect to escrow deposits and payments, if such are required, for which customary arrangements for repayment thereof have not been made, and no escrow deposits or payments of other charges or payments due the Seller have been capitalized under the Mortgage or the related Mortgage Note; (xxii) The origination, underwriting and collection practices used by the Seller with respect to each Mortgage Loan have been in all material respects legal, proper, prudent and customary in the subprime mortgage servicing business. Each Mortgage Loan is currently being serviced by Washington Mutual Bank; (xxiii) There is no pledged account or other security other than real estate securing the Mortgagors obligations; (xxiv) No Mortgage Loan has a shared appreciation feature, or other contingent interest feature; (xxv) [reserved]; (xxvi) The improvements upon each Mortgaged Property are covered by a valid and existing hazard insurance policy with a generally acceptable carrier that provides for fire extended coverage and coverage of such other hazards as are customarily covered by hazard insurance policies with extended coverage in the area where the Mortgaged Property is located representing coverage not less than the lesser of the outstanding principal balance of the related Mortgage Loan or the minimum amount required to compensate for damage or loss on a replacement cost basis. All individual insurance policies and flood policies referred to in this clause (xxvi) and in clause (xxvii) below contain a standard mortgagee clause naming the Seller or the original mortgagee, and its successors in interest, as mortgagee, and the Seller has received no notice that any premiums due and payable thereon have not been paid; the Mortgage obligates the Mortgagor thereunder to maintain all such insurance, including flood insurance, at the Mortgagors cost and expense, and upon the Mortgagors failure to do so, authorizes the holder of the Mortgage to obtain and maintain such insurance at the Mortgagors cost and expense and to seek reimbursement therefor from the Mortgagor; (xxvii) If the Mortgaged Property is in an area identified in the Federal Register by the Federal Emergency Management Agency as subject to special flood hazards, a flood insurance policy in a form meeting the requirements of the current guidelines of the Flood Insurance Administration is in effect with respect to such Mortgaged Property with a generally acceptable carrier in an amount representing coverage not less than the least of (A) the original outstanding principal balance of the Mortgage Loan, (B) the minimum amount required to compensate for Case 1:09-cv-01656-RMC Document 32-2 Filed 09/08/10 Page 33 of 52 SE 2144624 v5
13 damage or loss on a replacement cost basis or (C) the maximum amount of insurance that is available under the Flood Disaster Protection Act of 1973; (xxviii) There is no default, breach, violation or event of acceleration existing under the Mortgage or the related Mortgage Note; and neither the Seller nor any other entity involved in originating or servicing the Mortgage Loan has waived any default, breach, violation or event of acceleration; (xxix) Each Mortgaged Property is improved by a one- to four- family residential dwelling, including condominium units and dwelling units in planned unit developments, which, to the best of the Sellers knowledge, does not include cooperatives and does not constitute property other than real property under state law; (xxx) There is no obligation on the part of the Seller or any other party under the terms of the Mortgage or related Mortgage Note to make payments in addition to those made by the Mortgagor; (xxxi) Any future advances made prior to the Cut-off Date have been consolidated with the outstanding principal amount secured by the Mortgage, and the secured principal amount, as consolidated, bears a single interest rate and single repayment term reflected on the related Mortgage Loan Schedule. The consolidated principal amount does not exceed the original principal amount of the Mortgage Loan; (xxxii) Each Mortgage Loan was underwritten in accordance with the Sellers underwriting guidelines as described in the Prospectus Supplement as applicable to its credit grade in all material respects (the Underwriting Guidelines); (xxxiii) Each appraisal of a Mortgage Loan that was used to determine the appraised value of the related Mortgaged Property was conducted generally in accordance with the Sellers Underwriting Guidelines, and included an assessment by the appraiser of the fair market value of the related Mortgaged Property at the time of the appraisal. The Mortgage File contains an appraisal of the applicable Mortgaged Property; (xxxiv) None of the Mortgage Loans is a graduated payment Mortgage Loan, nor is any Mortgage Loan subject to a temporary buydown or similar arrangement; (xxxv) There are no Mortgage Loans with respect to which the monthly payment due thereon in January, 2006 had not been made, none of the Mortgage Loans has been contractually delinquent for more than 30 days more than once during the preceding twelve months and, no Mortgage Loan has ever experienced a delinquency of 60 or more days since the origination thereof; Case 1:09-cv-01656-RMC Document 32-2 Filed 09/08/10 Page 34 of 52 SE 2144624 v5
14 (xxxvi) Each Mortgage contains a provision that is, to the extent not prohibited by federal or state law, enforceable for the acceleration of the payment of the unpaid principal balance of the Mortgage Loan in the event that the Mortgaged Property is sold or transferred without the prior written consent of the mortgagee thereunder; (xxxvii) To the best of the Sellers knowledge no misrepresentation, negligence, fraud or similar occurrence with respect to a Mortgage Loan has taken place on the part of any person, including, without limitation, the Mortgagor, any appraiser, any builder or developer, or any other party involved in the origination of the Mortgage Loan or in the application of any insurance in relation to such Mortgage Loan; (xxxviii) Each Mortgage Loan constitutes a qualified mortgage within the meaning of Section 860G(a)(3) of the Code; (xxxix) The information set forth in the Prepayment Charge Schedule is complete, true and correct in all material respects at the date or dates respecting which such information is furnished and each Prepayment Charge is permissible and enforceable in accordance with its terms under applicable law upon the Mortgagors voluntary Principal Prepayment (except to the extent that: (1) the enforceability thereof may be limited by bankruptcy, insolvency, moratorium, receivership and other similar laws relating to creditors rights generally; or (2) the collectability thereof may be limited due to acceleration in connection with a foreclosure or other involuntary prepayment). No Mortgage Loan originated before October 1, 2002 has a Prepayment Charge for a term in excess of five years from the date of its origination and no Mortgage Loan originated on or after October 1, 2002 has a prepayment charge for a term in excess of three years from the date of its origination; (xl) The Loan-to-Value Ratio for each Mortgage Loan was no greater than 100% at the time of origination; (xli) The first date on which each Mortgagor must make a payment on the related Mortgage Note is no later than 60 days from the date of this Agreement; (xlii) With respect to each Mortgage Loan, the related Mortgagor shall not fail or has not failed to make the first monthly payment due under the terms of the Mortgage Loan by the second succeeding Due Date after the Due Date on which such monthly payment was due; (xliii) The transfer, assignment and conveyance of the Mortgage Notes and the Mortgages by the Seller pursuant to this Agreement are not subject to the bulk transfer or any similar statutory provisions in effect in any relevant jurisdiction, except any as may have been complied with; Case 1:09-cv-01656-RMC Document 32-2 Filed 09/08/10 Page 35 of 52 SE 2144624 v5
15 (xliv) There are no defaults in complying with the terms of the Mortgage, and either (1) any taxes, governmental assessments, insurance premiums, water, sewer and municipal charges or ground rents which previously became due and owing have been paid, or (2) an escrow of funds has been established in an amount sufficient to pay for every such item which remains unpaid and which has been assessed but is not yet due and payable. Except for payments in the nature of escrow payments, including without limitation, taxes and insurance payments, the Seller has not advanced funds, or induced, solicited or knowingly received any advance of funds by a party other than the Mortgagor, directly or indirectly, for the payment of any amount required by the Mortgage Note, except for interest accruing from the date of the Mortgage Note or date of disbursement of the Mortgage proceeds, whichever is greater, to the day which precedes by one month the Due Date of the first installment of principal and interest; (xlv) There is no proceeding pending, or to best of the Sellers knowledge threatened, for the total or partial condemnation of the Mortgaged Property or the taking by eminent domain of any Mortgaged Property; (xlvi) No Mortgage Loan is subject to the requirements of the Home Ownership and Equity Protection Act of 1994, as amended, or is a high cost or predatory loan under any state or local law or regulation applicable to the originator of such Mortgage Loan or which would result in liability to the purchaser or assignee of such Mortgage Loan under any predatory or abusive lending law. In the event that Financial Security Assurance, Inc. becomes a NIMS Insurer, no Mortgage Loan is a covered loan under the laws of the states of California, Colorado or Ohio; (xlvii) No proceeds from any Mortgage Loans were used to finance single-premium credit insurance policies. No borrower was required to purchase any credit life, disability, accident or health insurance product as a condition of obtaining the extension of credit. No borrower obtained a prepaid single-premium credit life, disability, accident or health insurance policy in connection with the origination of the Mortgage Loan; (xlviii) The Seller did not select the Mortgage Loans with the intent to adversely affect the interests of the Purchaser; (xlix) The Seller has not received any notice that any Mortgagor has filed for any bankruptcy or similar legal protection since the date of the origination of such Mortgage Loan. Prior to the date of the origination of any Mortgage Loan, the Seller did not receive any notice that any Mortgagor has filed for bankruptcy or similar legal protection except as permitted under the Underwriting Guidelines; (l) No Group I Mortgage Loan is a High-Cost Home Loan as defined in the Georgia Fair Lending Act, as amended (the Georgia Act), and no Mortgage Loan that was originated on or after October 1, 2002 and before March 7, 2003, is secured by a Mortgaged Property located in the State of Georgia; Case 1:09-cv-01656-RMC Document 32-2 Filed 09/08/10 Page 36 of 52 SE 2144624 v5
16 (li) No Group I Mortgage Loan is a High Cost Home Loan as defined in the Kentucky high-cost loan statute effective June 24, 2003 (Ky. Rev. Stat. Section 360.100); (lii) No Group I Mortgage Loan is a High Cost Home Loan as defined in the New Jersey Home Ownership Act effective November 27, 2003 (N.J.S.A. 46; 10B-22 et seq.); (liii) No Group I Mortgage Loan is a subsection 10 mortgage under the Oklahoma Home Ownership and Equity Protection Act; (liv) No Group I Mortgage Loan is a High-Cost Home Loan as defined in New York Banking Law 6-1; (lv) No Group I Mortgage Loan is a High Cost Home Loan as defined in the Arkansas Home Loan Protection Act effective July 16, 2003 (Act 1340 of 2003); (lvi) No Group I Mortgage Loan is a High-Cost Home Loan as defined in the New Mexico Home Loan Protection Act effective January 1, 2004 (N.M. Stat. Am. 58-21A-1 et seq.); (lvii) [reserved]; (lviii) Each Group I Mortgage Loan was originated in compliance with the following anti-predatory lending guidelines: a. Each Group I Mortgage Loan satisfies the eligibility for purchase requirements and was originated in compliance with Lender Letter # LL03-00 dated April 11, 2000 for Fannie Mae Sellers (the Lender Letter); b. No borrower was encouraged or required by the Seller to select a Group I Mortgage Loan product offered by the Group I Mortgage Loans originator which is a higher cost product designed for less creditworthy borrowers, unless at the time of the Group I Mortgage Loans origination, such borrower did not qualify taking into account credit history and debt-to- income ratios for a lower-cost credit product then offered by the Group I Mortgage Loans originator or any affiliate of the Group I Mortgage Loans originator; c. The methodology used in underwriting the extension of credit for each Group I Mortgage Loan employs objective mathematical principles which relate the borrowers income, assets and liabilities to the proposed payment and such underwriting methodology does not rely on the extent of the borrowers equity in the collateral as the principal determining factor in approving such credit extension. Such underwriting methodology provided reasonable assurance that at the time of origination (application/approval) the borrower had a reasonable ability to make timely payments on the Group I Mortgage Loan; Case 1:09-cv-01656-RMC Document 32-2 Filed 09/08/10 Page 37 of 52 SE 2144624 v5
17 d. With respect to any Group I Mortgage Loan that contains a provision permitting imposition of a premium upon a prepayment prior to maturity, (i) the Sellers pricing methods include mortgage loans with and without prepayment premiums; borrowers selecting Group I Mortgage Loans which include such prepayment premiums receive a monetary benefit, including but not limited to a rate or fee reduction, in exchange for selecting a Group I Mortgage Loan with a prepayment premium, (ii) prior to the Group I Mortgage Loans origination, the borrower had the opportunity to choose between an array of mortgage loan products which included mortgage loan products with prepayment premiums and mortgage loan products that did not require payment of such a premium, (iii) the prepayment premium is disclosed to the borrower in the loan documents pursuant to applicable state and federal law, and (iv) notwithstanding any state or federal law to the contrary, the Master Servicer shall not impose such prepayment premium in any instance when the mortgage debt is accelerated as the result of the borrowers default in making the loan payments; e. All points and fees related to each Group I Mortgage Loan were disclosed in writing to the borrower in accordance with applicable state and federal law. Except in the case of a Group I Mortgage Loan in an original principal amount of less than $60,000 which would have resulted in an unprofitable origination, no borrower was charged points and fees (whether or not financed) in an amount greater than 5% of the principal amount of such loan, such 5% limitation calculated in accordance with the Lender Letter; f. All fees and charges (including finance charges) and whether or not financed, assessed, collected or to be collected in connection with the origination and servicing of each Group I Mortgage Loan have been disclosed in writing to the borrower in accordance with applicable state and federal law and regulation; (lix) No Group I Mortgage Loan had a principal balance at origination in excess of Fannie Maes conforming loan balance limitations for single family loans set forth in the Fannie Mae Charter Act and the Fannie Mae Selling Guide in effect at the time of such Group I Mortgage Loan's origination; (lx) With respect to each Group I Mortgage Loan, information regarding the borrower credit file related to such Mortgage Loan has been furnished to credit reporting agencies in compliance with the provisions of the Fair Credit Reporting Act and the applicable implementing regulations; (lxi) No Mortgage Loan is a High Cost Loan or Covered Loan (as such terms are defined in the Standard & Poors LEVELS Glossary in effect on the Closing Date which i s now Version 5.6d Revised, Exhibit E, applicable portions of which are attached hereto as Exhibit A) and no Mortgage Loan originated on or after October 1, 2002 through March 6, 2003 is governed by the Georgia Act; Case 1:09-cv-01656-RMC Document 32-2 Filed 09/08/10 Page 38 of 52 SE 2144624 v5 18 (lxii) No Group I Mortgage Loan is a High Cost Home Mortgage Loan as defined in the Massachusetts Predatory Home Loan Practices Act effective November 7, 2004 (Mass. Ann. Laws ch. 183C); (lxiii) No Group I Mortgage Loan is a High Cost Home Loan as defined in the Indiana Home Loan Practices Act effective January1, 2005 (Ind. Code Ann. 24-9-1 through 24-9-9); and (lxiv) With respect to any Group I Mortgage Loan originated on or after August 1, 2004, neither the related Mortgage nor the related Mortgage Note requires the Mortgagor to submit to arbitration to resolve any dispute arising out of or relating in any way to the Mortgage Loan transaction. SECTION 7. Repurchase Obligation for Defective Documentation and for Breach of Representation and Warranty. (a) The representations and warranties contained in Section 5(ix) and Section 6 shall not be impaired by any review and examination of loan files or other documents evidencing or relating to the Mortgage Loans or any failure on the part of the Seller or the Purchaser to review or examine such documents and shall inure to the benefit of any assignee, transferee or designee of the Purchaser, including the Trustee for the benefit of holders of asset- backed certificates evidencing an interest in all or a portion of the Mortgage Loans. With respect to the representations and warranties contained herein which are made to the knowledge or the best of knowledge of the Seller, or as to which the Seller has no knowledge, if it is discovered that the substance of any such representation and warranty was inaccurate as of the date such representation and warranty was made or deemed to be made, and such inaccuracy materially and adversely affects the value of the related Mortgage Loan or the interest therein of the Purchaser or the Purchasers assignee, transferee or designee, then notwithstanding the lack of knowledge by the Seller with respect to the substance of such representation and warranty being inaccurate at the time the representation and warranty was made, the Seller shall take such action described in the following paragraph in respect of such Mortgage Loan. Upon discovery by the Seller, the Purchaser or any assignee, transferee or designee of the Purchaser of any materially defective document in, or that any material document was not transferred by the Seller (as listed on the Trustees initial certification), as part of any Mortgage File or of a breach of any of the representations and warranties contained in Section 5 or Section 6 that materially and adversely affects the value of any Mortgage Loan or the interest of the Purchaser or the Purchasers assignee, transferee or designee (it being understood that with respect to the representations and warranties set forth in the last sentence of (xxxix), (xlvi), the first sentence of (xlvii), (lxi) and (lxiv) of Section 6 herein, a breach of any such representation or warranty shall in and of itself be deemed to materially and adversely affect the interest therein of the Purchaser and the Purchasers assignee, transferee or designee) in any Mortgage Loan, the party discovering the breach shall give prompt written notice to the others. Within ninety (90) days of the earlier of the discovery or the Sellers receipt of notice of any such missing documentation which was not transferred to the Purchaser as described above or materially defective documentation or any such breach of a representation and warranty, the Seller promptly shall deliver such missing document or cure such defect or Case 1:09-cv-01656-RMC Document 32-2 Filed 09/08/10 Page 39 of 52
Central National Bank of Waco, Texas v. Federal Deposit Insurance Corporation, As Receiver For First Republicbank Waco, N.A., 910 F.2d 1279, 1st Cir. (1990)
STUYVESANT TOWN LITIGATION AGAINST CWCapital by junior lenders PCVST Mezzco 4 LLC v. Wachovia Bank Commercial Mortgage Trust 2007-C30, 652045/2014, New York State Supreme Court, New York County (Manhattan)