Certified Forensic Loan Auditors, LLC

 
  Upcoming Classes

Search CFLA's Article Archive:

Available Damages Against Sponsor of Mortgage-Backed Securities Trust Limited By “Sole Remedies” Provision in Governing Documents

commercialdivisionblog.com | June 25, 2014

On May 29, 2014, Justice Bransten of the New York County Commercial Division issued a decision in Saco I Trust 2006-5 v. EMC Mortgage LLC, 2014 NY Slip Op. 31432(U), ruling that Plaintiffs’ claim for rescissory and consequential damages was precluded by a “sole remedies” provision in the governing documents for a mortgage-backed securities investment.

In Saco I Trust, the plaintiff investors in mortgage-backed securities brought an action against the sponsor, EMC, for breaches of representations and warranties concerning the mortgages underlying the investment. The governing documents for the securitization trusts contained a “sole remedies” clause, which provided:

It is understood and agreed that the obligation under this Agreement of EMC to cure, repurchase or replace any Mortgage Loan as to which a breach has occurred and is continuing shall constitute the sole remedies against EMC (in its capacity as Sponsor) respecting such breach available to the Certificateholders, the Depositor or the Trustee.

Justice Bransten found that this provision barred any recovery “beyond EMC’s contractual obligation to ‘cure, purchase or replace any Mortgage Loan.’” Thus, plaintiffs’ claims for consequential and rescissory damages were precluded.

Justice Bransten went on to hold that, even in the absence of a sole remedies clause, consequential and rescissory damages would be unavailable under the facts of the case:

Consequential damages are “rarely awarded” and are permitted only where the contract conveys that the parties intended consequential damages to be recoverable in the event of breach. Here, Plaintiff points to no language and makes no argument that such damages were within the contemplation of the parties as the probable result of a breach at the time of or prior to contracting. The Court likewise finds no such language. Thus, Plaintiff’s claim for consequential damages merits dismissal.

Plaintiffs’ claim for rescissory damages also fails. As the First Department noted in MBIA Insurance Corp. v. Countrywide Home Loans, Inc., 105 A.D.3d 412, 413 (1st Dep’t 2013), rescission is a “very rarely used equitable tool.” Indeed, the First Department explained that rescissory damages are only applicable where rescission is impracticable and no alternative legal remedies are availing. While Plaintiff maintains that rescission would be impracticable, Plaintiffs claim for rescissory damages lacks merit, since Plaintiff has an alternative remedy – repurchase. Notwithstanding Plaintiffs “pervasive breach” arguments, the sole remedy provision agreed to by the parties limits the Trust’s remedies to repurchase.

(Citations omitted).

This decision illustrates that courts will enforce contractual limitations on damages, and that consequential damages are generally unavailable unless the parties specifically contract for such damages.

 

Back to June 2014 Archive

CFLA was founded by the Nation's Leading Foreclosure Defense Attorneys back in 2007 to serve the Foreclosure Defense Industry and fight pervasive Bank Fraud. Since opening our virtual doors, CFLA has rapidly expanded to become the premier online legal destination for small businesses and consumers. But as the company continues to grow, we're careful to hold true to our original vision. For us, putting the law within reach of millions of people is more than just a novel idea—it's the founding principle, just ask Andrew P. Lehman, J.D.. With convenient locations in Houston and Los Angeles, you can contact Our National Account Specialist and General Manager / Member Damion W. Emholtz at 888-758-2352 for a free Mortgage Fraud Analysis or to obtain samples of work product, including cutting edge Bloomberg Securitization Audits, Litigation Support, Quiet Title Packages, and for more information about our Nationally Accredited and U.S. Department of Education Approved "Mortgage Securitization Analyst Training Certification" Classes (3 days) 24 hours for approved CLE & MCLE Credit (Now Available Online).

SEE BELOW- http://www.certifiedforensicloanauditors.com

Call us toll free at 888-758-2352

Bookmark and Share
spacer
Facebook Like us on Facebook
Twitter Follow us on Twitter
YouTube View our YouTube Videos
LinkedIn Connect to us on Linkedin
 
BBB Logo

 

spacer
Contact us or view our Sample Documents & Audits by completing the form below.

  • Reload
  • Should be Empty:


 

DVD Sets Only $99

 

FREE Mortgage Fraud Analysis

 

Order Cutting-Edge Services Now

 

Quiet Title Packages from Licensed Attorneys

 

Affiliate Services

 

CFLA Sponsored Attorney Links

 

Take-Home Education Package

 

ALB Law Firm

 

Advocate Legal

 

The True News Network

 

Sutton Law Firm, P.L.L.C.

 

Rubenstein Business Law

 

Atighechi Law Group

 

Scunziano & Associates

 

Get Certified to Perform Mortgage Securitization Audits

 

CFLA Training Academy

 

Expert Witness Services

 

Cutting Edge Expert Securitization Reports

 

CFLA Credit Cards

 

Breaking News

 

Letters to the Editor

 

CFLA Weekly Newsletters

 

Code of Ethics

 

Testimonials

 

Instructional Videos

 

Job Opportunities

 

License Opportunities

 

MARS Rule

 

Product Samples

 

Resource Links

 

Servicer Information

 

Foreclosure Laws

 

REST Report

 

Quiet Title Packages from Licensed Attorneys

 

Advertise on CFLA

 

Advertising Space: Mortgage Securitization, Quiet Title

 

Certified Forensic Loan Auditors, LLC
13101 West Washington Blvd.
Suite 444
Los Angeles, CA 90066

Phone: 832-932-3951
Toll Free: 888-758-CFLA (2352)
Mobile Users: CLICK TO CALL
info@certifiedforensicloanauditors.com

   
 
CFLA IS NOT A LAW FIRM AND DOES NOT PROVIDE ANY LEGAL ADVICE. CFLA DOES NOT OFFER FORECLOSURE CONSULTING OR FORECLOSURE RELIEF
SERVICES. CFLA DOES NOT OFFER OR ASSIST WITH ANY LOAN MODIFICATION SERVICE. CFLA ALWAYS RECOMMENDS THAT CLIENTS RETAIN COMPETENT COUNSEL IN THEIR RESPECTIVE JURISDICTION. CFLA HAS A FREE PROGRAM TO REFER CFLA CLIENTS TO LAW FIRMS IN NEARLY EVERY STATE AND CFLA
DOES NOT CHARGE OR OBTAIN REFERRALS FEES FOR THESE SERVICES. SERVICES NOT OFFERED TO RESIDENTS OF THE STATE OF NEVADA.

 
Home About Us Privacy Policy Terms of Service Disclaimer SERVICES Careers Contact Us
 
COPYRIGHT © 2007-2016 Certified Forensic Loan Auditors ™ All rights reserved