Professional Documents
Culture Documents
Deutsche Bank Vs JPMorgan Chase, FDIC and WAMU
Deutsche Bank Vs JPMorgan Chase, FDIC and WAMU
v.
Defendants.
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. DBNTC’s 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
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
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Mortgage Securities Corporation (“WMB”). See Exhibit 1-A. The Primary Trusts provide for
securities. The Primary Trusts currently hold, as trust assets or collateral, mortgage loans
trusts or entities through which WMB issued mortgage-backed or derivative securities whose
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
9.11, “Certain Representations Regarding the Trust Estate”). The Primary Trusts, and the
$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’
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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.
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.
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.
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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
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 WMB’s 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
12. In connection with JPMC’s purchase of WMB, JPMC conducted a due diligence
review of WMB, including a review of WMB’s 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-
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
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whether to allow or disallow the Trustee’s 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
the Proof of Claim triggered the Trustee’s right to “file suit on such claim in the district or
territorial court of the United States for the district within which the depository institution’s
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
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 FDIC’s rejection, pursuant to
12 U.S.C. § 1821(d)(6), of the Proof of Claim by virtue of the FDIC’s 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
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U.S.C. § 1821(d)(6). This Court has jurisdiction over the subject matter of this action pursuant
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 WaMu’s “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 FDIC’s 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),
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
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.
“RMBS.”
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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
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
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
for the remaining two Primary Trusts. See Exhibit 1-A, n.1.
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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 trust’s assets (i.e., the mortgage loans). The governing documents
forming the trust typically appoint an independent trustee and specify the trustee’s rights,
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
schedule.
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 servicer’s 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 trust’s 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
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Servicer or Master Servicer for the mortgage loans included in the Primary Trusts, in
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,
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”).
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The Governing Documents assign to the Trustee the right to enforce the Representations and
on behalf of WaMu with respect to the formation of the Trusts and the servicing by WaMu of the
33. The Governing Documents are executory contracts that involve obligations that
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
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
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
38. The PAA expressly provides that JPMC “specifically assumes all mortgage
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39. The FDIC assigned to JPMC, and JPMC has assumed, all mortgage servicing
40. The mortgage servicing rights and obligations of WaMu with respect to the Trusts
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,
b. were all executed by WaMu and DBNTC, as Trustee, at the time the associated
d. have been continuously in existence, since the time of execution, and constitute
e. constituted official books and records of WMB at the time of WMB’s closing on
43. WaMu’s 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
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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
WaMu’s 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.
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
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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
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
with applicable local, state and federal laws, including, without limitation,
predatory and abusive lending, usury, equal credit opportunity, real estate
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
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creditors’ rights generally and by law. To the best of the Seller’s 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
Seller with respect to each Mortgage Loan have been in all material respects legal,
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
Guidelines”)”;
g. § 6(xxxiii) – “Each appraisal of a Mortgage Loan that was used to determine the
assessment by the appraiser of the fair market value of the related Mortgaged
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Property at the time of the appraisal. The Mortgage File contains an appraisal of
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
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
Mortgage Loan”;
j. § 6(xl) – “The Loan-to-Value Ratio for each Mortgage Loan was no greater than
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
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
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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
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
m. § 6(xlviii) – “The Seller did not select the Mortgage Loans with the intent to
n. § 6(lviii) – “Each Group I Mortgage Loan was originated in compliance with the
underwriting the extension of credit for each Group I Mortgage Loan employs
objective mathematical principles which relate the borrower’s income, assets and
liabilities to the proposed payment and such underwriting methodology does not
rely on the extent of the borrower’s equity in the collateral as the principal
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
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Representations and Warranties listed above from Section 6 of the MLPA for the LB0602 Trust
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.
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
Upon discovery by any of the Company, the Master Servicer, the Trustee or the
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
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Servicer, the Trustee or the Custodian, as the case may be, discovering such
51. WaMu’s Notice Obligation is also set forth in Section 7(a) of the MLPA
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 Trustee’s
and adversely affects the value of any Mortgage Loan or the interest of the
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,
materially and adversely affect the interest therein of the Purchaser and the
discovering the breach shall give prompt written notice to the others.
Governing Documents for each of the Primary Trusts setting forth WaMu’s Notice Obligations
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
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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
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
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
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
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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
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
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
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-
55. WaMu’s Repurchase Obligation is also set forth in Section 2.03(a) of the PSA for
that a document is missing from, the Mortgage File or of the breach by the Seller
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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
Seller, as to which the Seller has no knowledge, without regard to the Seller’s lack
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
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 Price within 90 days after the date on which the Seller was notified
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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 borrower’s 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
57. Attached hereto as Exhibit 7 is a chart indicating the contractual provisions in the
Governing Documents for each Primary Trust setting forth WaMu’s Repurchase Obligations
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 WaMu’s rights and obligations under the Governing Documents, including
information about the mortgage loans and the mortgage loan files, and access to officers of
59. By way of example, the Access Rights are set forth in Section 6.05 of the PSA for
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
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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 Servicer’s 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
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 Servicer’s 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 Servicer’s own funds,
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.
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the Governing Documents setting forth the Access Rights and the Indemnification Rights with
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),
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
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
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
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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.
65. In April 2010, the United States Senate Subcommittee on Investigations (the
“Senate Subcommittee”) held hearings about WaMu’s origination and securitization of mortgage
loans. Based on the Senate Subcommittee’s 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
66. Because WaMu has denied the Trustee access to records maintained by WaMu, as
Servicer, and has repeatedly refused to honor the Trustee’s 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
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Specialty Lending division (“Specialty Lending”) and WaMu’s Mutual Mortgage Securities
division (“Mutual Mortgage”). The Senate Subcommittee found that between 2000 and 2007,
WaMu’s Specialty Lending, i.e., subprime lending, sponsored 46 securitizations with a total
original collateral balance of approximately $77 billion. These securitizations were primarily by
WaMu’s 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 WaMu’s
subprime securitizations during the time period. Wall Street and the Financial Crisis: Hearing
before the Permanent Subcomm. On Investigations, April 13, 2010, (“Subcommittee Hearing”),
68. The remaining Primary Trusts, with a total original collateral balance of
approximately $92 billion, account for nearly half of the securitizations of WaMu’s Mutual
Mortgage division between 2000 and 2007 that were analyzed by the Senate Subcommittee. Id.,
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
70. The Senate Subcommittee report, associated hearings, and documents released
related to those hearings (collectively, the “Senate Record”) provide multiple examples of
WaMu’s breaches of Representations and Warranties. For example, the Senate Record indicates
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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 WaMu’s Repurchase and Notice Obligations with respect to the mortgage loans in the
71. In addition to the extensive evidence that WaMu’s 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,
home loans that too often contained excessive risk, fraudulent information, or
errors.”
without disclosing its analysis to investors who bought the securities, and also
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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 WaMu’s Repurchase and Notice Obligations with respect to the mortgage loans in the
74. Based upon: (a) the pervasiveness of such practices by WaMu, as found by the
Senate Subcommittee; and (b) the high proportion of WaMu’s 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 WaMu’s Repurchase and Notice
75. The extent of such practices by WaMu and WaMu’s discovery and/or notice of
the breaches of the Representations and Warranties is further evidenced by the following excerpt
Over the years, both Long Beach and Washington Mutual were the subject of
repeated criticisms by the bank’s 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
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were among the worst performing in the marketplace. In 2003, for example,
Washington Mutual stopped Long Beach’s 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 Beach’s sales
agreements.
nonperforming loans from investors, suffered a $107 million loss, and had to
increase its repurchase reserve by nearly $75 million. As a result, Long Beach’s
senior management was removed, and Long Beach’s subprime lending operations
Despite those changes, early payment defaults and delinquencies surged again in
2006, and several 2007 reviews identified multiple lending, credit, and appraisal
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
suffered from lending and securitization deficiencies related to its own mortgage
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
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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
were found to contain lower quality loans that did not meet the bank’s credit
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
investors, identifying ineffective controls that had “existed for some time.”
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
77. By way of example, the following excerpts from the Senate Record evidence
WaMu’s breaches of the Governing Documents, including but not limited to, Sections 6(xxii),
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a. “In its examinations from 2004 to 2008, the OTS noted that WaMu did not have
was especially important in the case of WaMu because of its high-risk lending
and significant growth. Further, when OTS pointed out weaknesses in WaMu’s
internal controls, WaMu management did not always take action to resolve those
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
c. An April 17, 2006 WaMu audit of Long Beach found that “[r]elaxed credit
subprime personnel . . . coupled with a push to increase loan volume and the lack
quality.” Id.
d. A September 21, 2005 WaMu audit of Long Beach found that “[i]n 24 of 27
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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
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
13,000 loans in the warehouse had been reviewed” and “of these, approximately
950 were deemed saleable, 800 were deemed unsaleable, and the remainder
4,500 securitized loans eligible for foreclosure, 10% could not be foreclosed due
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
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agencies.’” Opening Statement of Senator Carl Levin Before the U.S. Senate
“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
amortizing loans in which the loan principal actually increased over time.
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
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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): “WaMu’s review of appraisals establishing
the value of single family homes did not always follow standard residential appraisal methods
because WaMu allowed a homeowner’s estimate of the value of the home to be included on the
form sent from WaMu to third-party appraisers, thereby biasing the appraiser’s evaluation.”
79. WaMu’s 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,
WaMu’s former president and chief operating officer, wrote to Kerry Killinger, WaMu’s 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
34
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70%.” Mr. Rotella summarized by telling his boss “[i]t is ugly.” Subcommittee Hearing,
80. Moreover, after September 25, 2008, the Trusts have experienced a substantial
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 WaMu’s
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 Trustee’s 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.
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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 WaMu’s 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 WaMu’s records and other information
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
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
WaMu’s 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
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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
86. Upon the FDIC’s 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
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
37
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not include or reference any liabilities or obligations arising under the Governing Documents,
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
89. More specifically, the FDIC contends in its motion to dismiss (p. 19) that: “As the
structure of the [PAA] makes clear, WaMu’s Trust-related seller and servicer obligations are
among the liabilities that FDIC Receiver transferred to JPMC and that JPMC expressly agreed to
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
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 WaMu’s
38
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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
94. One or both of the FDIC and/or JPMC, as WaMu’s successor-in-interest and/or
discovered and/or had notice of WaMu’s 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 WaMu’s breaches of the Governing Documents.
97. The Trust’s and the Trustee’s 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 Trustee’s 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 WaMu’s Repurchase Obligations, including the enforcement mechanism
of providing WaMu with notice of a breach with respect to, and demanding cure, substitution or
39
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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
101. As a direct and proximate cause of these breaches of contract, the Trusts have
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 WaMu’s liabilities and obligations “as seller, servicer, sponsor or in
104. JPMC contends that under the PAA it did not assume WaMu’s 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
WaMu’s breaches of the Governing Documents, as well as for WaMu’s 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, WaMu’s two potential successors-in-interest – the FDIC or JPMC –
succeed(s) to WaMu’s liabilities for breaches of Governing Documents and WaMu’s ongoing
40
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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
WHEREFORE, the Trusts and the Trustee request the following relief from this Court:
C. a declaratory judgment declaring: (i) which, or in the alternative, that both of,
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.
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The Trustee hereby demands a jury trial to the fullest extent allowed by law.
- and -
42
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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.
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
Anne M. Devens
FEDERAL DEPOSIT INSURANCE CORPORATION
3501 Fairfax Drive
Room VS-D-7062
Arlington, VA 22207
(703) 562-2204
Email: adevens@fdic.gov
43
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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
44
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EXHIBIT 1A
Case 1:09-cv-01656-RMC Document 32-1 Filed 09/08/10 Page 2 of 52
EXHIBIT 1-A
PRIMARY TRUSTS
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
Page 1 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
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 4 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 5 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 6 of 52
EXHIBIT 1B
Exhibit 1-B
Secondary32-1
Case 1:09-cv-01656-RMC Document Trusts Filed 09/08/10 Page 7 of 52
Page 1 of 1
Case 1:09-cv-01656-RMC Document 32-1 Filed 09/08/10 Page 8 of 52
EXHIBIT 2
Case 1:09-cv-01656-RMC Document 32-1 Filed 09/08/10 Page 9 of 52
WHOLE BANK
AMONG
and
DATED AS OF
T ABLE OF CONTENTS
ii
Washington Mutual Bank
Execution Copy Henderon. Nevada
Whole Bank P&A
Case 1:09-cv-01656-RMC Document 32-1 Filed 09/08/10 Page 11 of 52
5.1 Payment of Checks, Drafts and Orders ." .......................... ................ .........18
5.2 Certain Agreements Related to Deposits ............................................... ....18
5.3 Notice to Depositors. ........... ........ .............. ..................... .......................... .18
6.1 Transfer of
..........19
Records..........................................................................
6.2 Delivery of Assigned Records ........... ............ ................ ......... .............. .....20
6.3 Preservation of Records .............................................................................20
6.4 Access to Records; Copies.........................................................................20
11
Washington Mutual Bank
Execution Copy
Henderson. Nevada
Whole Bank P&A
Case 1:09-cv-01656-RMC Document 32-1 Filed 09/08/10 Page 12 of 52
13.1 Entire Agreement .................................. ..... ............ ........ ..... ...... .......... .......30
13.2 Headings .... ............................................................... ..... ........ .................. ..30
13.3 Counterpars.............................................................................................. .30
13.4 Governing Law......................................................... ........ ........ .......... .......30
13.5 Successors.. ...... ...... ...................... .................. .... ............ ..... ............. ...... ....30
13.6 Modification; Assignent .................. ................... ......... ........... ...... ..........31
13.7 Notice ........................................................................................................31
13.8 Maner of Payment.............................................. ......... .......... .............. .....31
13.9 Costs, Fees and Expenses ..........................................................................32
13.10 Waiver........................................................................................................32
13.11 Severability...... ... ...... .... .......... ............ ...... ..... .... ... ...... ...... ....... ..................32
13.12 Term of Agreement....................................................................................32
13.13 Survival of Covenants, Etc. .......................................................................32
SCHEDULES
EXHIBIT
3.2(c) Valuation of Certain Qualified Financial Contracts....... ..... ........... ......... ..38
iv
Execution Copy
Washington Mutual Bank
Hendern. Nevada
Whle Bank P&A
Case 1:09-cv-01656-RMC Document 32-1 Filed 09/08/10 Page 13 of 52
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, 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, 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 14 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
"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.
"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.
2
Washington Mutual Bank
Execution Copy
Henderson, Nevada
Whole Bank P&A
Case 1:09-cv-01656-RMC Document 32-1 Filed 09/08/10 Page 15 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
the Failed Ban.
income or fees, or general or specific reserves on the Accounting Records of
legal holiday
"Business Day" means a day other than a Saturday, Sunday, Federal
"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).
3
Washington Mutual Bank
Execution Copy Henderson. Nevada
Whle Bank P&A
Case 1:09-cv-01656-RMC Document 32-1 Filed 09/08/10 Page 16 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.
"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.
"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.
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
Washington Mutual Bank
Execution Copy Henderson. Nevada
Whole Bank P&A
Case 1:09-cv-01656-RMC Document 32-1 Filed 09/08/10 Page 17 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
theBid Amount.
Initial The
Payment
Initial Payment shall be payable by the Corporation to the Assuming Ban if
is a negative amount. The Initial Payment shall be payable by the Assuming Ban to the
Corporation if the Initial Payment is positive.
"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
lease or other title retention agreement relating to such
conditional sale agreement or capital
Asset.
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
lines of credit, home equity lines of credit,
deposit account), revolving commercial
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
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
Execution Copy Henderson. Nevada
Whole Bank P&A
Case 1:09-cv-01656-RMC Document 32-1 Filed 09/08/10 Page 18 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.
"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.
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
Washington Mutual Bank
Execution Copy Henderson. Nevada
Whole Bank P&A
Case 1:09-cv-01656-RMC Document 32-1 Filed 09/08/10 Page 19 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.
"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
Ban Closing, and (y) for any
the date of
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 which the Repurchase Pnce is being determined, as
the date as of
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.
"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
Washington Mutual Bank
Execution Copy
Henderon. Nevada
Whole Bank P&A
Case 1:09-cv-01656-RMC Document 32-1 Filed 09/08/10 Page 20 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.
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 Failed Ban which are
the liabilities of
2.2 Interest on Deposit Liabilties. The Assuming Ban agrees that it wil assume all
Ban Closing, and it wil accrue and pay interest on Deposit liabilities
deposit contracts as of
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
the depositor or other pary, any withdrawal thereof shall be subject to the terms of
obligation of
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
Washington Mutual Bank
Execution Copy Henderson. Nevada
Whole Bank P&A
Case 1:09-cv-01656-RMC Document 32-1 Filed 09/08/10 Page 21 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.
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,
the Receiver
transfers, conveys, and delivers to the Assuming Ban, all right, title, and interest of
in and to all ofthe assets (real, personal and mixed, wherever located and however acquired)
including all subsidiares, joint ventures, parnerships, and any and all other business
the Failed
combinations or arangements, whether active, inactive, dissolved or terminated, of
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
Ban Closing shall be purchased at a price of
zero.
Failed Ban prior to the date of
9
Washington Mutual Bank
Execution Copy
Henderon, Nevada
Whole Bank P&A
Case 1:09-cv-01656-RMC Document 32-1 Filed 09/08/10 Page 22 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.
(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
Washington Mutual Bank
Execution Copy
Henderson. Nevada
Whole Bank P&A
Case 1:09-cv-01656-RMC Document 32-1 Filed 09/08/10 Page 23 of 52
(ii) a list of all Related Liabilities with respect to the Assets identified
pursuant to (i) above; and
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
the Credit Files
which date shall not be later than thirty (30) days after receipt by the Receiver of
(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.
11
Washington Mutual Bank
Execution Copy Henderon. Nevada
Whole Bank P&A
Case 1:09-cv-01656-RMC Document 32-1 Filed 09/08/10 Page 24 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:
(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;
(iv) secured by collateral which also secures any asset owned by the Receiver;
or
(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 Washington Mutual Bank
Whole Bank P&A Henderson, Nevada
Case 1:09-cv-01656-RMC Document 32-1 Filed 09/08/10 Page 25 of 52
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
any, of the Failed Ban and to maintain all of
the necessar facilities for the use of such
Boxes, if
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.
(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
Washington Mutual Bank
Execution Copy
Henderson. Nevada
Whole Bank P&A
Case 1:09-cv-01656-RMC Document 32-1 Filed 09/08/10 Page 26 of 52
the
Closing; provided, that any liability based on the misfeasance, malfeasance or nonfeasance of
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.
the assets
(d) The Assuming Ban shall provide to the Receiver written verification of
held in connection with the Failed Ban's trst business within sixty (60) days after Ban
Closing.
(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
leases for leased Ban Premises, if any,
Receiver to assign to the Assuming Ban any or all
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
leases within the
(or enter
option period of its election to accept or not to accept an assignment of any or all
leases
into subleases or new leases in lieu thereof). The Assuming Ban agrees to assume all
assigned (or enter into subleases in lieu thereof) pursuant to this Section 4.6.
(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
Execution Copy Henderson. Nevada
Whole Bank P&A
Case 1:09-cv-01656-RMC Document 32-1 Filed 09/08/10 Page 27 of 52
(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.
the
(e) Certain Requirements as to Furniture, Equipment and Fixtures. If
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).
15
Washington Mutual Bank
Execution Copy
Henderson. Nevada
Whole Bank P&A
Case 1:09-cv-01656-RMC Document 32-1 Filed 09/08/10 Page 28 of 52
Receiver previously repudiated any such lease), and (y) be required to purchase all Fixtures
Ban Closing.
owned by the Failed Ban and located on such premises as of
(g) Omitted.
(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
theof the
Receiver all operating costs with respect thereto and to comply with all relevant terms of
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.
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
Execution Copy Henderson. Nevada
Whole Bank P&A
Case 1:09-cv-01656-RMC Document 32-1 Filed 09/08/10 Page 29 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
the Receiver, if any, in and to agreements the Assuming Ban assumes
right, title and interest of
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
Washington Mutual Bank
Execution Copy
Henderson. Nevada
Whole Bank P&A
Case 1:09-cv-01656-RMC Document 32-1 Filed 09/08/10 Page 30 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
the
Ban agrees to pay all properly drawn checks, drafts and withdrawal orders of depositors of
Failed Ban presented for payment, whether drawn on the check or draft forms provided by the
the
Failed Ban or by the Assuming Ban, to the extent that the Deposit balances to the credit of
respective makers or drawers assumed by the Assuming Ban under this Agreement are
suffcient to permit the payment thereof, and in all other respectsthe
to Failed
discharge,
Baninwith
the respect
usual course
to
of conducting a baning business, the duties and obligations of
the Failed Ban assumed by the
the Depsit balances due and owing to the depositors of
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.
the (i)
(a) Within thirty (30) days after Ban Closing, the Assuming Ban shall give Failed
the Deposit liabilities of
the Failed Ban of its assumption of
notice to depositors of
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.
the Failed Ban
(b) The Assuming Ban shall give notice by mail to depositors of
concering the procedures to claim their deposits, which notice shall be provided to the
18
Washington Mutual Bank
Execution Copy Henderson. Nevada
Whole Bank P&A
Case 1:09-cv-01656-RMC Document 32-1 Filed 09/08/10 Page 31 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
(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;
(iii) records of depsit balances carred with other bans, baners or trust
companies;
(iv) Loan and collateral records and Credit Files and other documents;
(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
Washington Mutual Bank
Execution Copy
Henderon, Nevada
Whole Bank P&A
Case 1:09-cv-01656-RMC Document 32-1 Filed 09/08/10 Page 32 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
ARTICLE VIII
PROFORMA
20
Washington Mutual Bank
Execution Copy
Hendersn. Nevada
Whole Bank P&A
Case 1:09-cv-01656-RMC Document 32-1 Filed 09/08/10 Page 33 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.
(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
Washington Mutual Bank
Execution Copy Henderson, Nevada
Whole Bank P&A
Case 1:09-cv-01656-RMC Document 32-1 Filed 09/08/10 Page 34 of 52
9.4 Payment of Deposits. In the event any depositor does not accept the obligation of
the Failed Bank assumed by the Assuming
the Assuming Bank to pay any Deposit liability of
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 demandthe
to Deposit
provide to the Receiver
liability reflected on
funds suffcient to pay such claim in an amount not in excess of
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 thetodepositor,
hold suchordeposit
to itself,
and not to make any payment of such deposit balance to or on behalf of
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
whichtowas
withold payment
withheld of such
pursuant deposit
to this
balance or return such deposit balance the payment of
Section.
the respect
(a) In connection with any investigation, proceeding or other matter with Failed Ban
to
the Failed Ban retained by the Receiver, or any asset of
any asset or liability of
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 withoutthe
other limitation
Subsidiares
or qualification to (i) its directors, offcers, employees and agents and those of
acquired by the Assuming Ban, and (ii) its books and records, books,
the books and records
records of such
and Credit Files
Subsidiares and all Credit Files, and copies thereof. Copies of
22
Washington Mutual Bank
Execution Copy Henderon. Nevada
Whole Bank P&A
Case 1:09-cv-01656-RMC Document 32-1 Filed 09/08/10 Page 35 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) ainterest,
certificate
fees and
the transfer and the amount of
setting forth the principal amount on the date of
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)
the
the Assuming Ban or any Affliate of
maintained by, owned by, or in the possession of
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 the
mayFailed
request from
Ban time to
employed
the Receiver, make available employees of
time, and, at the request of
the pro forma statement pursuant to
or retained by the Assuming Ban to assist in preparation of
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 the
transactions contemplated hereby, the closing ofthe Failed Ban and the appointment of
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
Execution Copy Henderson. Nevada
Whole Bank P&A
Case 1:09-cv-01656-RMC Document 32-1 Filed 09/08/10 Page 36 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.
(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 to perform, satisfy or
the Assuming Ban or the ability of
(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.
ARTICLE XII
INDEMNIFICATION
24
Execution Copy Washington Mutual Bank
Whole Bank P&A Hendern, Nevada
Case 1:09-cv-01656-RMC Document 32-1 Filed 09/08/10 Page 37 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;
(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;
the Failed
(4) claims based on any action or inaction prior to Ban Closing of
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;
the Failed
(5) claims based on any malfeasance, misfeasance or nonfeasce of
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
Washington Mutual Bank
E"ecution Copy
Henderson, Nevada
Whole Bank P&A
Case 1:09-cv-01656-RMC Document 32-1 Filed 09/08/10 Page 38 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
the Receiver, have been actually and
(including attorneys' fees) which, in the determination of
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;
the Failed Ban that is
(2) claims with respect to any liability or obligation of
expressly assumed by the Assuming Ban pursuant to this Agreement or subsequent to the
by the Assuming Ban or any Subsidiar or Affliate of
the Assuming Ban;
execution hereof
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
the Failed Ban, its
from the Receiver for any claims based upon any action or inaction of
directors, offcers, employees or agents as fiduciar, agent or custodian prior to Ban Closing;
the
(5) claims based on any violation or alleged violation by any Indemnitee of
the United States of
antitrst, branching, baning or ban holding company or securities laws of
. (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
thereofprovided 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
the Failed Ban or its
hereunder for any present or former director, offcer, employee or agent of
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;
(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.
27
Execution Copy Washington Mutual Bank
Whole Bank P&A Henderon. Nevada
Case 1:09-cv-01656-RMC Document 32-1 Filed 09/08/10 Page 40 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:
the
(a) give written notice to the Regional Counsel (Litigation Branch) of
(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.
28
Washington Mutual Bank
Execution Copy
Henderson, Nevada
Whole Bank P&A
Case 1:09-cv-01656-RMC Document 32-1 Filed 09/08/10 Page 41 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:
(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).
29
Washington Mutual Bank
Execution Copy
Henderon. Nevada
Whole Bank P&A
Case 1:09-cv-01656-RMC Document 32-1 Filed 09/08/10 Page 42 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
the Receiver and no other Person or entity.
XII are the sole and exclusive responsibility of
ARTICLE XIII
MISCELLANEOUS
the paries
13.1 Entire Agreement. This Agreement embodies the entire agreement of
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.
30
Washington Mutual Bank
Execution Copy Henderson, Nevada
Whole Bank P&A
Case 1:09-cv-01656-RMC Document 32-1 Filed 09/08/10 Page 43 of 52
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
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
Execution Copy Hender. Nevada
Whole Bank P&A
Case 1:09-cv-01656-RMC Document 32-1 Filed 09/08/10 Page 44 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
the
waiver shall be in writing; and further provided, that no failure or delay on the par of
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.
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
Ban Closing; provided, that the provisions of
Section 6.3 and 6.4
the sixth (6th) anniversar of
event, the guaranty of the Corporation, as provided in and in accordance with the provisions of
the term. Expiration of the term of this
Section 12.7 shall be in effect for the remainder of
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,
when such
and (ii) breach ofthis Agreement occurrng prior to such expiration, regardless of
breach is discovered.
32
Washington Mutual Bank
Execution Copy Hendersn. Nevada
Whole Bank P&A
Case 1:09-cv-01656-RMC Document 32-1 Filed 09/08/10 Page 45 of 52
BY:
Attest:
BY:
Attest:
BY:
Attest: , - ì
~ if\ltJ ¿ßt i1 'JL
33
Execution Copy Washingtoii Mutual Bank
Whole Bank P.lA Hendmoii. Nevda
Case 1:09-cv-01656-RMC Document 32-1 Filed 09/08/10 Page 46 of 52
BY~~~
RECEIVER OF: WASHINGTON MUTUAL BANK,
HENDERSON, NEVADA
Attest:
hiJ$u
BY:~~
FEDERA DEPOSIT INSURACE CORPORATION
BY:
Attest:
33
Execution Copy Washington Mutual Bank
Whole Bank P&A Henderson. Nevada
Case 1:09-cv-01656-RMC Document 32-1 Filed 09/08/10 Page 47 of 52
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.
34
Execution Copy Washington Mutual Bank
Whole Bank P&A Henderon, Nevada
Case 1:09-cv-01656-RMC Document 32-1 Filed 09/08/10 Page 48 of 52
35
Execution Copy Washington Mutual Bank
Whole Bank P&A Henderson, Nevada
Case 1:09-cv-01656-RMC Document 32-1 Filed 09/08/10 Page 49 of 52
36
Washington Mutual Bank
Execution Copy
Henderson, Nevada
Whle Bank P&A
Case 1:09-cv-01656-RMC Document 32-1 Filed 09/08/10 Page 50 of 52
(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
37
Washington Mutual Bank
Execution Copy
Henderson. Nevada
Whole Bank P&A
Case 1:09-cv-01656-RMC Document 32-1 Filed 09/08/10 Page 51 of 52
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
Qualified Financial
1. The price at which the Assuming Ban sells or disposes of
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
Washington Mutual Bank
Execution Copy Henderon, Nevada
Whole Bank P&A
Case 1:09-cv-01656-RMC Document 32-1 Filed 09/08/10 Page 52 of 52
(v) For all other Qualified Financial Contracts where published market quotes
are unavailable, the adjusted price shall be the average ofthe 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
Execution Copy Washington Mutual Bank
Whole Bank P&A Henderson, Nevada
Case 1:09-cv-01656-RMC Document 32-2 Filed 09/08/10 Page 1 of 52
EXHIBIT 3
Case
Case1:09-cv-01656-RMC
1:09-cv-01656-RMC Document
Document32-2
1-1 Filed
Filed08/26/09
09/08/10 Page
Page22of
of25
52
BY HAND DELIVERY
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,
Enclosures
DB 1162194206.2
Case
Case1:09-cv-01656-RMC
1:09-cv-01656-RMC Document
Document32-2 Filed08/26/09
1-1 Filed 09/08/10 Page
Page33of
of25
52
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) 33·0943418
The undersigned further states that he/she makes this Claim on behalf of
~-\...,~C-\...........---
(Signeture of Parson making (Title)
the Claim)
FIRM Deutsche Bank National Trust Company
(If applicable)
ADDRESS (10) 1761 Ea.st St Andrew PI
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).
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ATTACIIMENT A
to
Proof of Claim of
1l~~UTSCI-IE BANK NATIONALTIWST COMI'ANY,
AS TRUSTEE ANIl CUSTOIlIAN
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 ilscll~ 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
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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.
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 \V AMU 10 service Mortgage Loans under the
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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)
can no! 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
brc(\(.;h~s 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
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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
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dOCllrn~lllS <lrc
subject (0 Repurchase Claims lor th~ 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
allcillar~ 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 W AMU (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 W AMU, 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.
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 sLlccessor-in~interest 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.
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.
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21. As purchaser of the such Securities on behalf orthe 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
C. M1SCEI.I.ANEOlJS
0'
->. 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.
24. 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.
25. 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.
26. 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
I07{lIn, 6
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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,
107017776
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The Reckoning. WaMu Built 1:09-cv-01656-RMC
1:09-cv-01656-RMC
an Empire on Bad Loans - Series· Document
Documenthttp://www.nytimes.coml2008112128/businessl28wamu.html?J=1
NYTimc... 32-2
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_.-
W.lcom. to
TlmnP.op"
r,mesp~1e Le1S You Share and Drscover the BeSl ol NYTomes com 111J .....
In
R.!I'~l.r
H"9"'"" Now
-
SMrcIl .... NVTr..... COllI
Business
WOIUJ) US l'l Y IIU:GIOl'l KUSIl'lESS n£IlNOlOGY SCIENCE ltEALTlt SPORTS OPll'lIOl'l AATS S'M.I'; TIl.AVf.1. JOlIS REAL.. ESTAn AUTOS
fHE RECKCN<lG
·ltIe hope to do to this industry what ~rlll-,\jm:c did to theirs• nytlmes.com linked(m,
.srurbu.*~ 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
,~.
T1rMo ,.. .... Y.... r -
,_It<__ ';,-...
_ U....h. _ t._..
I _ I l l _ •. : " '..... <k. .,.
singer.
The Reckoning
Mr. Parsons could not verify the singer's income, so he
Mor/gage Factory Flush Wilh Energy
had him photographed in front of his home dressed in his
Miele. in Ihis nrie. ho'" uplored
lh' eou..,1 ollhu flMncioJ en,i•. mariachi outfit. The photo went into a WaMu file. 10.' 110
Approved. • ., II
Interviews with two dor.en fonner employees. mortgage l. 1~~,"'II'''''''''' 11'11.", "'n,'" ,\",,,', F,,~," ,.,,1',·11 \
\1.,,,, T,'"",~
brokers, real estate agents and appraisers reveal the 2 n,· ~.",.I.,,,,,·,.,,I' l'.'lL.',,', I\~ \ ~I",' II,- ',~",<I 10,
PUSH TO GROW Fo<..... ""lIIOY.... relentless pressure to chum out loans that produced such T"\~,, .\l,·.ll,',,, '0"
...,. Nl ",trI K ry Kdlngooo "' e"'"'(10 results. While that sample may not fully represent a bank 3. 1I.1i"" ~13k"",,,fl',,,,,·,,,,,,,,·. N""'~llllt""
WaMJ Dec a IoanfaclOry. ognomg
DOf,,,,,,,,",' ".:",,"". with tens of thousands of people, it does renect the views 4. "" NI'Il 1l~I"'rI.... Il,·,,"''''' 110,' N,-,,,
of employees in WaMu mortgage operations in California, 5. Th,'Il~"~"""'N' S.)'i,,~ \'"., \\'"~l,, 11,,;1\ Eml'''''O"
SIi"b I"",,,,
Florida, Il1inois and Texas.
(" ,:",,,'1••1)', 110>1""'" 'Il,~,' '1'<>1<1 ,\le 11',,1 ~I,"I,>t(
Their accounts are consistent with those of 89 other former employees who are
N~>"er I.", ,11o"."
1 (;".1'''''''' (!:o", ~I,~h" I' N"d",~
confidential witnesses in II class action filed against WaMu in feder,ll court in Seattle by
8 \",,, T'UI'I" 1l"''''''''<I, 1I'1Iho"llh~ s,,'~'''~
former shareholders.
9. (,,,,,,, I,,,· 1', "I<' It', N,,' ,I""., ,',,, II", an h"",o;:.'·"'~
(:""",~h"
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
GoI:>C""""",,,lOS'.
WaMu's chief executive from 1990 untit he was forced out in September.
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. DINING
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.
Let the good times tiptoe
WaMu gave mortgage brokers handsome commissions for selling the riskiest loans, ......, ,,, O""r>g
Now v....... 'ee,pe.
which carried higher fLOCS, bolstering profits and ultimately the compensation ofthe
l;i<*~ !>e~e_!!!'<I ""_' 'eoP'"
bank's executh'es, WaMu pressured appraisers to provide innate<! property values that An_ok! ;>(O'l8',ntance 1:>_t>8 fo<..9Ol''''''
made loans appear less risky, enabling Wall Street to bundle them more easily for sale
to investors.
-'OIIERTlSEI.'ENT S
"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 Vo~gu,n;I'" DooHte Now
alive, they would give you a loan. Actually, I think if you were dead, they would still give
~ rw-d!\,j '" ~ , n" can moe' ""'., ,on., ~ ... ,''''~
,,,,,,,.11>< , (·,.,r'" ,,'!
you a loan."
.lI'1I1"!X'1ll l·h'l"t·, which bought WaMu for $1.9 billion in September and rccciwd $25
Go<
,~ .
N.... d '0
~ ~
."ow mo,.,?
0·"""" do' ..... 0' n...
Go, SO% o" ... ~o~ yO~ g... '~o g,~
"0':0
billion a fC!W weeks later as part of the taxpayer bailout of the financial services industry, 0' 1M Now YO,' 1,mo,
declined to make former WaMu executives available for interviews.
Gel lome. Ro.o", F,... A 0'llU'
Now.pop'" T~o' R. .o. L". I~.
JPMorgan also declined to oornment on WaMu's operdtions before it bought the R..' l~,ng
company. "It is a different era for our customers and for the company," a spokesman
said.
NOV. of WAS JtTS1' Nt: UGJl'fImIG.
For those who placed their faith and money in WaMu, the bank's implosion came as a SUbIcrIbfl """\0 Th. N... \\>11 TIme,
lTd l!O1 50" 011 C1ktI- _ .
shock.
a.XtI>!)o<l~
"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,
Ad. by Google
president of Avalon Partners, an investment firm. 'There were people at WaMu that
u~hesl l"alL'd nuthin); more th:lll a shnm or charade. These people broke e\"Cry
Umbilical Cord Bank
f\llld:, menIal nile of nll111 i 11~ a COl1lll:111Y.·
Gel a FREE InlOfmiIhon 1<11 CA ReSlclcnts Save
$500, &p 1116
_ VlaCot'd convcord-6Iood-&pefls
Some WaMIl employ...·••.. who work.....:1 for Ihe bank during the boom now han' ll.1jrels.
"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 "~IS 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 hun~er for ~1'O\>1h.
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.
A cnlcial 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.
"W:IMu carne Ollt with lhat sl~:lI1, and thaI was what we had to live by,~ 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 ~111e 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 Om)eHttclel'i.~i()n :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')' ..... ord,~ Ms,
Zweibcl rct.:allcd. ~llll'Y treatl'<! US like we were in a swealShop.~
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
infurmatu.m. bhe had to t'tlllsuh with :1 lo;lI1 officer - which she dcscrilx:d as all
UI1I11o.::1S;IOt c.~Jlericu .....,. -n1t.'y would be furinl"": rots. ,..aback said. -rhey wuuld ]Jut it Oil
)"Ou, that they WCn'n'tl:oin~ 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. ,~,b:lCk 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 I:mdscallin~ 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.
'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 I':ll~ns 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..~t spit it out and gel it done. That's what they wanled us to do.
Garbllge ill, and garlmF,c Oil\."
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.H·L'(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.
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.
Wa~tu's retail mortga~e office in Downey, C:llif.. sp(.'eializ(:d in selliu!', option ARMs to
l';ltino customers who spoke lillIe English :md del~llllcd 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 a~enls 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:
Accordin~ to the a~enl. the str;ltegy was the hnlinchild ofThonms Ramire7. who
oversaw a sales teHm of ahout:w agents at the Downey br,lIlt:h durin~ the firstlwlf of
this decade, ami now works fur \\',,11 .. I·"r~".
l\'lr. Ra mi l'ez con Ii rmed that he and his tea m ena hied 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 I're,~ident'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.
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'llnircz·s teallltOl'Ontinue using the
rererJ<11 fL-.::s, the agcnt said.
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.
5 on 1213012008 I I : I 3 AM
Case
CaseI',mpirc
The Reckoning. Wa/\llIlllIilt;m 1:09-cv-01656-RMC
1:09-cv-01656-RMC
on Bad Loans - Series - Document
Documenthttp://www.nytimcs.conV200S/12I2S/busincssl2Swamu.html?
NYTimc.. 32-2
1-1 Filed
Filed08/26/09
09/08/10 PagePage17 17of of25
52 r I&sq \1,.,
l"l-~alled une mortga);,c 10 an elderly couple from a broker on 1\1r. Clark's te~IIJl,
With a fi~ ...'t.i in..."Omc of about $3,:.WO a 1lI0nth, the t"Ouple lLt'(.'t.it:d a fi~l't.i-ratc loan. But
thcir bmkcr can1l.'J ~I commissiOlL ufthl'l.'e j)('n.:cnt~lge points by arrJnging an option
ARM for them. :lIId did so hy listing their inrome as $7,000 a month. Soon, thcir
])~I)'mCnl juml>o.:d frum rou);hly $1.000;\ month to aboul $3.000. C<lusing tht!11l to fall
bdund.
Mr. Clario:. who now wnrk.~ 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,
W~I"lu 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
nlOl1ga~e 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:
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. Killin~er 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. 1~1.ter 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 in"e.~ton; 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 m~lde 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,
'" _ _ Ol or-. _ - " ' " on pntIl on c.:........ 2$ 2038 on Mo.e Art>t.les In BUSIness ~
_""Ol,._Vert_
<>-IE •
I.. ."~ ..,,, '!",,,.J ..... o.-E·_ _•
)I.'"... ~·,
o.-E·_ _•
1\ '''~, "Ill~n~"'(
INSIDE !'t.'\T1MES.CO~1
Editorial
;.J()tcho()k Continue
\"'rhn '-Jm~.'nIM'r.ll
Reading>>:
1'''1"",. I""" ,I )"Orh"'lh
"rolin"n 1>1.....•
.. ~. "~I·I~lf".,,, I",,' -'·""'J:'MI. f" ,'1\, 11101 1'>1."", us~ ~'''' I..· I.·n,·._ ,."'" ''',·I--I:,~,~ ...·n",,_
(;,,,.,..
".~, I•. "" I_
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n 1.,II'I"'ho:)" 1'11. :,,"''' fk." "'~' 11... r.,·~" llru ... 'In,o.II""H I""" ' Ih~.-Io
__ us NYIIl...... e.-•• l......-w sa-. _ Sl'O"b osw- ...... ~ T,'" ..leO. _ E_ _• a_lOT""
L130002 1.011" BC':!ch Mort~<l"c l.oan Trust 2000-1 1211I00 1,000,000.594.71 34.811,895.51
LBOOFI I.oll~ Deach Ilome E, uilY Loan Trust 2000-LB I 8/1/00 1.312,248,898.65 59,532,662.65
L130101 LOIl~ Beach Mort~a"c Loan Trust 2001-1 3/1/0 I 725.466,488.78 36,039,908.53
LBO I 02 Lon~ 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.BO I 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 2004·4 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
Case1:09-cv-01656-RMC
1:09-cv-01656-RMC Document
Document32-2
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Filed08/26/09
09/08/10 Page
Page20
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52
Exhibit A-1
To Proof of Claim of
Deutsche Bank National Trust Company
LHOS03 Lon~ 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 2005·W12 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 2006·2 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 MOr1!!,a~c l.oan Trust 2006-5 6/1/06 1.925.001.176.58 1.061,974.757.27
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 LOIl~ OCllch MOrl"ll"C Loan Trusl 2006-8 9/1/06 1.380,727,067 .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. 200I·AR) 11/9/01 1.167,350,333.57 32,739.901.70
Case
Case1:09-cv-01656-RMC
1:09-cv-01656-RMC Document
Document32-2
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Filed08/26/09
09/08/10 Page
Page21
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52
Exhibit A-1
To Proof of Claim of
Deutsche Bank National Trust Company
WA05AB WaMu Asset Acceptance Corp. 2005-AR13 10/25/05 3,90 I,265,905.06 1,555,245,023.74
Case
Case1:09-cv-01656-RMC
1:09-cv-01656-RMC Document
Document32-2
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09/08/10 Page
Page23
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52
Exhibit A-1
To Proof of Claim of
Deutsche Bank National Trust Company
W1\061\ 1 WaMu Asset ACccotlltlCC Com. 200G-AR I 1/30/06 1,516.188,758.27 719,35? ,278.04
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
WA071[1 WllMu Asset Acccptance Com. 2007-HEI 111/07 1,393,794,25 [.58 1,096,561,655.17
MSOOOI Moroan Stanley ABS Canital [ Inc. 2000-1 711/00 360,107,788.57 7,463,097.13
LB05N4 LOll" Ikach Asset lIatdin ' Corp. eI2005·W1.2 I)nl2005 12,747.551.05
EXHIBIT 4
EXHIBIT 5
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
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 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.
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.
SE 2144624 v5
Case 1:09-cv-01656-RMC Document 32-2 Filed 09/08/10 Page 29 of 52
(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
The Seller hereby represents and warrants to the Purchaser, that as of the
Closing Date with respect to each Mortgage Loan:
(ii) [reserved];
SE 2144624 v5
8
Case 1:09-cv-01656-RMC Document 32-2 Filed 09/08/10 Page 30 of 52
(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
SE 2144624 v5
9
Case 1:09-cv-01656-RMC Document 32-2 Filed 09/08/10 Page 31 of 52
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);
SE 2144624 v5
10
Case 1:09-cv-01656-RMC Document 32-2 Filed 09/08/10 Page 32 of 52
(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 Seller’s 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;
SE 2144624 v5
11
Case 1:09-cv-01656-RMC Document 32-2 Filed 09/08/10 Page 33 of 52
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 trustee’s sale after default by the Mortgagor;
(xxv) [reserved];
SE 2144624 v5
12
Case 1:09-cv-01656-RMC Document 32-2 Filed 09/08/10 Page 34 of 52
(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;
SE 2144624 v5
13
Case 1:09-cv-01656-RMC Document 32-2 Filed 09/08/10 Page 35 of 52
(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;
SE 2144624 v5
14
Case 1:09-cv-01656-RMC Document 32-2 Filed 09/08/10 Page 36 of 52
(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;
SE 2144624 v5
15
Case 1:09-cv-01656-RMC Document 32-2 Filed 09/08/10 Page 37 of 52
(lvii) [reserved];
SE 2144624 v5
16
Case 1:09-cv-01656-RMC Document 32-2 Filed 09/08/10 Page 38 of 52
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;
SE 2144624 v5
17
Case 1:09-cv-01656-RMC Document 32-2 Filed 09/08/10 Page 39 of 52
(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 bene fit 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 Purchaser’s 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.
SE 2144624 v5
18
Case 1:09-cv-01656-RMC Document 32-2 Filed 09/08/10 Page 40 of 52
EXHIBIT 6
Case 1:09-cv-01656-RMC Document 32-2 Filed 09/08/10 Page 41 of 52
Exhibit 6
Page 1 of 9
Case 1:09-cv-01656-RMC Document 32-2 Filed 09/08/10 Page 42 of 52
Exhibit 6
Page 2 of 9
Case 1:09-cv-01656-RMC Document 32-2 Filed 09/08/10 Page 43 of 52
Exhibit 6
Page 3 of 9
Case 1:09-cv-01656-RMC Document 32-2 Filed 09/08/10 Page 44 of 52
Exhibit 6
Page 4 of 9
Case 1:09-cv-01656-RMC Document 32-2 Filed 09/08/10 Page 45 of 52
Exhibit 6
Page 5 of 9
Case 1:09-cv-01656-RMC Document 32-2 Filed 09/08/10 Page 46 of 52
Exhibit 6
Page 6 of 9
Case 1:09-cv-01656-RMC Document 32-2 Filed 09/08/10 Page 47 of 52
Exhibit 6
Page 7 of 9
Case 1:09-cv-01656-RMC Document 32-2 Filed 09/08/10 Page 48 of 52
Exhibit 6
Page 8 of 9
Case 1:09-cv-01656-RMC Document 32-2 Filed 09/08/10 Page 49 of 52
Exhibit 6
Page 9 of 9
Case 1:09-cv-01656-RMC Document 32-2 Filed 09/08/10 Page 50 of 52
EXHIBIT 7
Case 1:09-cv-01656-RMC Document 32-2 Filed 09/08/10 Page 51 of 52
EXHIBIT 7
Issue ID Notice Obligation Repurchase Obligation Indemnification Access Rights
Rights
1 LB00F1 PSA § 2.05 PSA § 2.04 PSA § 8.05(b) PSA § 6.06
2 LB0002 PSA § 2.03 PSA § 2.03 PSA § 8.05(b) PSA § 6.05
3 LB0101 PSA § 2.04(b) PSA § 2.03 PSA § 8.05(b) PSA § 6.05
4 LB0102 PSA § 2.04(b) PSA § 2.03 PSA § 8.05(b) PSA § 6.05
5 LB0103 PSA § 2.04(b) PSA § 2.03 PSA § 8.05(b) PSA § 6.05
6 LB0104 PSA § 2.04(b) PSA § 2.03 PSA § 8.05(b) PSA § 6.05
7 LB0201 PSA § 2.04(b) PSA § 2.03 PSA § 8.05(b) PSA § 6.05
8 LB0202 PSA § 2.04(b) PSA § 2.03 PSA § 8.05(b) PSA § 6.05
9 LB0205 PSA § 2.04(b) PSA § 2.03 PSA § 8.05(b) PSA § 6.05
10 LB0301 PSA § 2.04(b) PSA § 2.03 PSA § 8.05(b) PSA § 6.05
11 LB0302 PSA § 2.04(b) PSA § 2.03 PSA § 8.05(b) PSA § 6.05
12 LB0303 PSA § 2.04(b) PSA § 2.03 PSA § 8.05(b) PSA § 6.05
13 LB0304 PSA § 2.04(b) PSA § 2.03 PSA § 8.05(b) PSA § 6.05
14 LB0401 PSA § 2.04(b) PSA § 2.03 PSA § 8.05(b) PSA § 6.05
15 LB0402 PSA § 2.04(b) PSA § 2.03 PSA § 8.05(b) PSA § 6.05
16 LB0403 PSA § 2.04(b) PSA § 2.03 PSA § 8.05(b) PSA § 6.05
17 LB0404 PSA § 2.04(b) PSA § 2.03 PSA § 8.05(b) PSA § 6.05
18 LB0405 PSA § 2.04(b) PSA § 2.03 PSA § 8.05(b) PSA § 6.05
19 LB0406 PSA § 2.04(b) PSA § 2.03 PSA § 8.05(b) PSA § 6.05
20 LB0501 PSA § 2.04(b) PSA § 2.03 PSA § 8.05(b) PSA § 6.05
21 LB0502 PSA § 2.04(b) PSA § 2.03 PSA § 8.05(b) PSA § 6.05
22 GS05X2 PSA § 2.03(d) MLPA § 3.3 PSA § 8.05 PSA § 3.19
23 LB05W1 PSA § 2.04(b) PSA § 2.03 PSA § 8.05(b) PSA § 6.05
24 LB0503 PSA § 2.04(b) PSA § 2.03 PSA § 8.05(b) PSA § 6.05
25 LB05W2 PSA § 2.04(b) PSA § 2.03 PSA § 8.05(b) PSA § 6.05
26 LB05W3 PSA § 2.04(b) PSA § 2.03 PSA § 8.05(b) PSA § 6.05
27 GS06L1 PSA § 2.03(d) MLPA § 3.3 PSA § 8.05 PSA § 3.19
28 LB06W1 PSA § 2.04(b) PSA § 2.03 PSA § 8.05 PSA § 6.05
29 LB06W2 PSA § 2.04(b) PSA § 2.03 PSA § 8.05 PSA § 6.05
30 LB06W3 PSA § 2.04(b) PSA § 2.03 PSA § 8.05 PSA § 6.05
31 LB0601 PSA § 2.04(b) PSA § 2.03 PSA § 8.05(b) PSA § 6.05
32 LB0602 PSA § 2.04(b) PSA § 2.03 PSA § 8.05 PSA § 6.05
33 LB0603 PSA § 2.04(b) PSA § 2.03 PSA § 8.05 PSA § 6.05
34 LB0604 PSA § 2.04(b) PSA § 2.03 PSA § 8.05 PSA § 6.05
35 LB060A PSA § 2.04(b) PSA § 2.03 PSA § 8.05 PSA § 6.05
36 LB0605 PSA § 2.04(b) PSA § 2.03 PSA § 8.05 PSA § 6.05
37 LB0606 PSA § 2.04(b) PSA § 2.03 PSA § 8.05 PSA § 6.05
38 LB0607 PSA § 2.04(b) PSA § 2.03 PSA § 8.05 PSA § 6.05
39 LB0608 PSA § 2.04(b) PSA § 2.03 PSA § 8.05 PSA § 6.05
40 LB0609 PSA § 2.04(b) PSA § 2.03 PSA § 8.05 PSA § 6.05
41 LB0610 PSA § 2.04(b) PSA § 2.03 PSA § 8.05 PSA § 6.05
42 LB0611 PSA § 2.04(b) PSA § 2.03 PSA § 8.05 PSA § 6.05
43 WA07H1 PSA § 2.03 PSA § 2.03 PSA § 8.05 PSA § 6.05
44 WA0001 PSA § 2.04(b) PSA §7.01(c) PSA § 3.05
45 WA0107 PSA § 2.04(b) PSA §7.01(c) PSA § 3.05
46 WA01A3 PSA § 2.03 PSA § 2.03 PSA § 8.05 PSA § 6.05
47 WA02A2 PSA § 2.08 PSA § 2.08 PSA § 8.05 PSA § 6.05
48 WA02A6 PSA § 2.08 PSA § 2.08 PSA § 8.05 PSA § 6.05
49 WA02A9 PSA § 2.08 PSA § 2.08 PSA § 8.05 PSA § 6.05
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Case 1:09-cv-01656-RMC Document 32-2 Filed 09/08/10 Page 52 of 52
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