ACE Securities Corp.,, Appellant,v.DB Structured Products, Inc., Respondent.BriefN.Y.April 30, 2015APL-2014-00156 New York County Clerk's Index No. 650980/12 Court of cAppralz of the *ate rif \1*.etlx 'Work ACE SECURITIES CORP., HOME EQUITY LOAN TRUST, SERIES 2006-SL2, by HSBC BANK USA, NATIONAL ASSOCIATION, solely in its capacity as Trustee pursuant to a Pooling and Servicing Agreement, dated as of March 1, 2006, Plaintiff:Appellant, — against — DB STRUCTURED PRODUCTS, INC., Defendant-Respondent. BRIEF OF THE MORTGAGE BANKERS ASSOCIATION AS AMICUS CURIAE Matthew S. Hellman JENNER & BLOCK LLP 1099 New York Avenue, NW Washington, DC 20001-4412 Phone: 202-639-6000 Fax: 202-639-6066 Email: mhellman@jenner.com Stephen L. Ascher JENNER & BLOCK LLP 919 Third Avenue New York, NY 10022-3908 Phone: 212-891-1600 Fax: 212-891-1699 Email: sascher@jenner.corn Attorneys for Amicus Curiae the Mortgage Bankers Association TABLE OF CONTENTS STATEMENT OF INTEREST OF AMICUS CURIAE 1 PRELIMINARY STATEMENT 2 ARGUMENT 6 I. THE TRUSTEE IS DEMONSTRABLY INCORRECT WHEN IT CLAIMS THAT SIX YEARS FROM SECURITIZATION IS INADEQUATE TO BRING REPURCHASE CLAIMS 6 II. AN UNBOUNDED STATUTE OF LIMITATIONS WOULD HAVE SEVERE POLICY CONSEQUENCES AND IMPOSE UNDUE BURDENS ON THE HOUSING MARKET AND BEYOND 11 CONCLUSION 14 TABLE OF AUTHORITIES Page(s) CASES ACE Sec. Corp. v. DB Structured Prods., 977 N.Y.S. 2d 229 (1st Dep't 2013) ("ACE IT') 9 Flanagan v. Mount Eden Gen. Hosp., 24 N.Y.2d 427, 429 (1969) 11 MASTR Asset Backed Secs. Trust 2006-HE3 ex rel. US. Bank Nat'l Ass 'n v. WMC Mortg. Corp., 2012 WL 4511065 (D. Minn. Oct. 1, 2012) 7 Old Colony Trust Co. v. City of Omaha, 230 U.S. 100 (1913) 10 Policemen's Annuity & Benefit Fund v. Bank of America, NA., 907 F. Supp. 2d 536 (S.D.N.Y. 2012) 8 Riddlesbarger v. Hartford Ins. Co., 74 U.S. 386 (1868) 11 Thur v. IPCO Corp., 569 N.Y.S.2d 713 (1st Dep't 1991) 10 STATUTES Del. Code Ann. Title 10, § 8106 7 OTHER AUTHORITIES Peter Eavis, Hedge Funds Snifffor Even Bigger Payouts,N.Y N.Y. TIMES (Jan. 28, 2014) 9 STATEMENT OF INTEREST OF AMICUS CURIAE The Mortgage Bankers Association (MBA) is the national association representing the real estate finance industry, an industry that employs more than 280,000 people in virtually every community in the country. Headquartered in Washington, D.C., the association works to ensure the continued strength of the nation's residential and commercial real estate markets; to expand homeownership and extend access to affordable housing to all Americans. MBA promotes fair and ethical lending practices and fosters professional excellence among real estate finance employees through a wide range of educational programs and a variety of publications. Its membership of over 2,200 companies includes all elements of real estate finance: mortgage companies, mortgage brokers, commercial banks, thrifts, REITs, Wall Street conduits, life insurance companies and others in the mortgage lending field. See generally www.mba.org . One of MBA's important functions is to provide insight and analysis on legal and other issues that are of great concern to the mortgage banking community. This appeal raises precisely that type of issue. It asks this Court to determine the proper application of New York State's six-year statute of limitations for alleged breaches of contractual representations and warranties in residential mortgage-backed securities, or RMBS, agreements. This Court's resolution of this issue will affect not only the parties to this case, but the many other parties that have entered such agreements, including MBA members, as well as the banking public more generally. In addition, this Court's decision will affect other commercial transactions both within and beyond the real estate finance industry. Given the potential effects of this Court's decision, MBA has a strong interest in the resolution of this appeal. For these reasons, MBA was granted leave to file an amicus brief in this case before the First Department. In light of the diverse experience and perspectives of MBA members throughout the real estate finance industry, MBA believes that its views will be of assistance to this Court as well. PRELIMINARY STATEMENT As this Court is well aware, this action is just one among many currently pending in the New York courts (and in other courts applying New York law) based on alleged breaches of representations and warranties made in residential mortgage backed securities ("RMBS") agreements. Those representations and warranties, concerning the characteristics of mortgage loans and the properties securing them, were made at a particular time—in this case, the date of the Mortgage Loan Purchase Agreement (the "META") in March 2006. Thus, the representations and warranties were either true or false, and the contract either complied with or breached, at that time. 2 The Trustee contends that New York's six-year statute of limitations runs not from the date of the breach of a representation, but from the date the Trustee chooses to demand relief for the breach. That interpretation effectively would create a perpetual statute of limitations over the lifetime of the loans and permit the Trustee to bring suit decades after the breach in question occurred. The First Department properly rejected the Trustee's arguments in the appellate division and held that the limitations period runs from the date of the alleged breach, and not from when the Trustee discovers the breach or demands relief for it. Defendant-Respondent Deutsche Bank Structured Products has ably explained why the First Department's decision is correct under New York law. MBA will not repeat those legal arguments here. Instead, MBA submits this brief to respond to one of the Trustee's central assertions in this Court: that investors will lack "meaningful protection" under the contract unless they are allowed to bring suit at any time during the lifetime of the loans. E.g., Br. for Plaintiff- Appellant 27. According to the Trustee, it "blinks reality" to contend that investors could discover breaches within six years of the securitization or that it would be commercially reasonable to expect them to do so. Id Respectfully, however, "reality," is quite different from what the Trustee depicts. Any casual observer of commercial litigation knows that RMBS litigation has reached staggering levels in recent years. Conservatively estimated, trustees 3 have brought repurchase actions concerning more than $50 billion of RMBS securities since the financial crisis of 2008, and the vast majority of those suits were brought within the six-year limitations period as measured by the date of securitization. To be sure, the parties in those cases will dispute whether those suits have merit, but what is indisputable is that responsible investors have not been hampered by a six-year limitations period in bringing claims. Tellingly, the Trustee is arguing for a what amounts to a perpetual limitations period not at the direction of original certificateholders in the Trust, but on behalf of two hedge fund investors specializing in distressed debt (the "Funds"),that were not even formed until five years after the March 2006 securitization. See Br. for Defendant-Respondent 11 & n.4. Thus, when the Trustee contends that the New York's generous six-year limitations period is inadequate, it is not speaking to the original understanding of the original certificate-holders in the trust, but on behalf of other interests. The Trustee's argument is undercut further still by the facts of this case. Although they argue that six years is inadequate, the late-purchasing Funds discovered alleged breaches and brought them to the Trustee's attention before the six-year period expired. Indeed, the Funds filed this suit exactly six years from the date of securitization, showing that they understood well what the operative limitations period is. What the Funds failed to do was convince the Trustee to file 4 suit within that time. The Trustee's delay on that score hardly establishes that six years was inadequate to identify the alleged breaches in the first place. There is no good reason to distort what is a generous statute of limitations law for the sake of particular investors, and every reason not to. Adopting the Trustee's rule would expose banks to perpetual liability, deprive them of the "repose" envisioned by the statute of limitations, and require them to spend decades resolving stale disputes about the status of mortgage loans and properties as they existed in 2006. Such long-running litigation would have obvious detrimental effects on future transactions. If the statute of limitations were essentially limitless, entities like DBSP would be deterred from making broad representations and warranties in future RIVIBS agreements. And because they would need to keep more capital on hand to address potential lawsuits, they would have less to lend to consumers. Affirming a limitless statute of limitations would only make it more difficult for consumers, particularly first-time and middle income borrowers, to obtain the credit they need to purchase a home. Nor would these detrimental effects be limited to the RIVIBS industry. Because many commercial contracts include representations and warranties made on the date of the agreement, along with demand requirements before a plaintiff may bring suit, the uncertainty created by a ruling in the Trustee's favor would frustrate commercial deals in a variety of contexts. 5 For all of these reasons, this Court should affirm the decision below. ARGUMENT I. THE TRUSTEE IS DEMONSTRABLY INCORRECT WHEN IT CLAIMS THAT SIX YEARS FROM SECURITIZATION IS INADEQUATE TO BRING REPURCHASE CLAIMS. The Trustee asks this Court to impose what amounts to a perpetual statute of limitations because, in its view, "it is unthinkable that investors would have agreed to invest" in the Trust without a repurchase obligation that lasted for the 30-year life of the loans. Br. for Plaintiff-Appellant 27; see also, e.g., Reply Br. 10-11. According to the Trustee, investors would lack "any meaningful protection" for breaching loans if they were required to file suit within six years of the alleged breach of the representation, i.e., six years from the closing date of the securitization. I Br. for Plaintiff-Appellant 29. The Trustee's argument cannot be squared with the facts. Since the financial crisis in 2008, plaintiffs have brought repurchase claims regarding at least $50 billion of RMBS. The substantial majority of these actions were filed within six years of the closing dates of their respective transactions. 2 Indeed, despite contending that six years is inadequate, the Trustee itself acknowledges that most RMBS agreements are already the subject of litigation. See id at 44 (noting that 1 Some cases have disputed whether the six-year period runs from the "closing date" of the securitization, or the date "as-of' which the representations were made, which is typically a week or two earlier. This case does not present that issue and MBA takes no position on it. 2 See Appendices A-B hereto. 6 "Mitigation is already underway as to the vast majority of the RMBS agreements at the height of the financial crisis"). Regardless whether these suits have merit, they demonstrate that trustees hardly need a perpetual statute of limitations to enjoy "meaningful protection" of their interests. Six years from the date of securitization — a period more generous than other commercial jurisdictions 3 — has proven ample to bring claims. The sheer volume of timely suits speaks for itself, but the Trustee's arguments do not even make sense on their own terms. Repurchase actions are overwhelmingly concerned with defaulted loans because trusts have little interest in demanding repurchase of performing loans. Contrary to the Trustee's rhetoric that decades are needed to identify breaches, trustees and their certificate-holders can easily identify loans in default that may contain breaches during the six year period. Trustees issue monthly reports that include default statistics to all certificateholders. Those statistics would reveal any unusual pattern of early defaults, which in turn would provide certificateholders or the Trustee with grounds to investigate potential breaches. See MASTR Asset Backed Secs. Trust 2006-11E3 ex rel. US. Bank Nat'l Ass 'n v. WMC Mortg. Corp., 2012 WL 4511065, 3 California, in comparison, provides a four-year limitations period for breach of contract claims. Cal. Civ. Proc. § 337. Delaware provides a three-year limitations period. Del. Code Ann. tit. 10, § 8106. at *7 & n.11 (D. Minn. Oct. 1, 2012) (notice of default may require a party to investigate whether there was a breach); Policemen's Annuity & Benefit Fund v. Bank of America, NA., 907 F. Supp. 2d 536, 553 (S.D.N.Y. 2012) (similar). Conversely, as time passes, a trustee has less and less need to bring a repurchase action. Under the standard contract language, a repurchase claim must show that the claimed breach "materially and adversely affects the value of such Mortgage Loan or the interest therein of the Certificateholders." R. 121-22 (PSA § 2.03(a).). A loan securitized in 2006 that defaults 10, 15, or even 30 years later is unlikely to have done so as a result of false representation in 2006. Instead, any default is far more likely to result, for example, from subsequent changes in the borrower's employment or income. Tellingly, the plea from the Trustee here to impose perpetual liability comes not at the behest of original investors of the trust urging their original understanding of the contract, but from hedge funds investors that were not even created until late 2011, more than five years after the securitization. These entities have no special insight into the original investors' understanding of the contract, and no basis for contending that a 30-plus year statute of limitations was necessary to convince the original investors to buy certificates back in 2006. To the contrary, the Funds represent a well-documented trend in which investors purchased certificates in RMBS trusts at a time when their prices were 8 significantly depressed as a result of the financial crisis, and then pursued litigation as part of that investment strategy. See, e.g., Peter Eavis, Hedge Funds Sni ff for Even Bigger Payouts, N.Y . TIMES (Jan. 28, 2014) (noting that if hedge funds' strategies succeed, they "stand to make a windfall"). When these certificate-holders urge a perpetual limitations period they are not trying to enforce a bargain they negotiated, but seeking profits through litigation. The facts of this case are illustrative. After the Funds were formed, they quickly acquired certificates, and then, on January 12, 2012, wrote to the Trustee, alleging that 322 loans were in breach. At that time, a few months before the six- year anniversary of the March 28, 2006, Closing Date, the Funds asked that the Trustee "act expeditiously to request [a tolling] agreement" "in light of potential expiring statute of limitations deadlines." R. 359. One month later, the Funds requested that the Trustee bring this suit—a request that the Trustee denied. The Funds then brought this suit six years to the day from the securitization's Closing Date, even though the Trustee alone was authorized to file suit under the contract's no-action clause. See ACE Sec. Corp. v. DB Structured Prods., 977 N.Y.S. 2d 229, 230 (1st Dep't 2013) ("ACE IP). 4 4 That the Trustee did not seek to substitute itself as Plaintiff until after the six-year statute of limitations had expired does not suggest that a longer (or later-accruing) statute of limitations is necessary. The Summons alleges that, by the time the suit was filed, the Trustee had already refused to sue DBSP; during that time, it easily could have chosen to bring suit instead. R. 24- 27. 9 It is no accident that the Funds filed suit on the last day of the limitations period. Indeed, an extraordinary number of RMBS suits have been filed on, or just prior to, the six-year anniversary of the closing date of the relevant securitization. See Appendices A-B hereto. These actions show that investors — including the Funds here — have understood full well that they have six years from the date of the securitization to bring suit. See, e.g., Old Colony Trust Co. v. City of Omaha, 230 U.S. 100, 118 (1913) ("Generally speaking, the practical interpretation of a contract by the parties to it for any considerable period of time before it comes to be the subject of controversy is deemed of great, if not controlling, influence."); Thur v. IPCO Corp., 569 N.Y.S.2d 713, 715 (1st Dep't 1991) (considering parties' actions as evidence of their intent regarding when restrictive covenant would begin to run). Indeed, when certificate holders — like the ones at issue here — invested in the trusts so close to the six-year anniversary, they certainly knew that they risked being unable to file a timely action. There is no need to distort settled limitations law on their behalf. In short, were this Court to provide an indefinite statute of limitations, it would not carry out the intentions of the parties, nor provide trustees with needed breathing room to bring suit. Responsible investors have known about, and acted in accordance with, a six-year limitations period running from the closing date of the securitization. 10 II. AN UNBOUNDED STATUTE OF LIMITATIONS WOULD HAVE SEVERE POLICY CONSEQUENCES AND IMPOSE UNDUE BURDENS ON THE HOUSING MARKET AND BEYOND There is not only no good reason to distort New York's limitations law to protect speculative litigation,. In fact, there is every reason not to do so. Adopting the Trustee's perpetual limitations rule would lead to long-running litigation at great expense to both defendants and the courts. Banks would face decades-long liability for claims about representations that were either true or false in 2006. As time wears on, documents will be lost and memories will fade, making litigation that much more time-intensive and difficult (and burdensome on the courts), and creating greater risk. Those are precisely the types of costs that statutes of limitations are meant to preclude. See Riddlesbarger v. Hartford Ins. Co., 74 U.S. 386, 390 (1868) (statutes of limitations "protect[] parties from the prosecution of stale claims, when, by loss of evidence from death of some witnesses, and the imperfect recollection of others, or the destruction of documents, it might be impossible to establish the truth"); Flanagan v. Mount Eden Gen. Hosp., 24 N.Y.2d 427, 429 (N.Y. 1969) ("There comes a time when [a defendant] ought to be secure in his reasonable expectation that the slate has been wiped clean of ancient obligations.") (internal quotation marks omitted) 11 Such a holding not only would impose great retrospective liability for wrongs allegedly committed years ago; it also would affect individuals' and institutions' actions in the days and years ahead. The potential for extended liability might discourage financial institutions and other organizations from entering into securitization transactions like the one at issue here. At the very least, it would dissuade entities like DBSP from making the type of broad representations and warranties it made in this case. Businesses simply could not afford to make such extensive representations if they could face liability—or at the very least, litigation—regarding them for decades to come. Most importantly„ an essentially endless statute of limitations would harm consumers. As an initial matter, securitization is vital to providing housing finance capital to consumers at competitive, broadly affordable rates. Imposing unbounded repurchase liability would make the mortgage market less efficient, with borrowers and lenders alike incurring greater financial and opportunity costs. Additionally, faced with the potential for liability over a 30-year term, mortgage banks would need to keep more capital on hand, and thus would have less to lend to the public. Longer and more uncertain exposure also would require banks to charge higher interest rates. And while, following the housing crisis, Congress already incentivized banks to impose higher credit standards, the increased exposure from a longer statute of limitations would require banks to make those 12 standards even more demanding. This, in turn, would further constrain consumers' ability to obtain loans. Nor would these problematic consequences be limited to RMBS cases. Many commercial contracts in banking and other industries include representations and warranties made at a date certain; many of those contracts also include a requirement that a counterparty demand a particular remedy before bringing suit. Those requirements are beneficial to both parties because they provide an orderly and predictable method of resolving disputes without resort to costly litigation. Yet if this Court were to adopt the Trustee's view of the law, any counterparty to such a contract could (and would) use the demand requirement as a means of delaying the accrual of its cause of action. The uncertainty associated with such litigation would be extremely expensive and disruptive in many of the ways noted above. In addition, that uncertainty might cause parties to future contracts not to include demand requirements, in turn increasing the number of disputes that proceed to costly litigation. 13 CONCLUSION For all of these reasons, the decision of the Appellate Division should be affirmed. Dated: New York, New York March 13, 2015 Respectfully submitted, JENNER & BLOCK LLP By: Matthew S. Hellman 1099 New York Avenue, NW Washington, DC 20001-4412 Phone: 202-639-6000 Fax: 202-639-6066 Email: mhellman@jenner.com Stephen L. Ascher 919 Third Avenue New York, NY 10022-3908 Phone: 212-891-1600 Fax: 212-891-1699 Email: sascher@jenner.com Attorneys for Amicus Curiae Mortgage Bankers Association 14 Appendix A: Litigation Filed Within Six Years of the Closing Date Trusts At Issue Case Court Docket Number Date Litigation Was Filed Closing Date Litigation Filed More or Less Than 6 Years After Closing Date Value of Securities in Trust HVMLT 2005-10 HVMLT 2005-10 v. Countrywide N.Y. State 652388-2011; 11-6223; 11- 2265 (12-1066) 8/29/2011 9/19/2005 Less than 6 years $224,800,200 MABS 2006-HE3 MABS 2006-HE3 v. WMC II D. Minn. 12-CV-2149 9/2/2011 8/16/2006 Less than 6 years $1,142,334,000 BSABS 2007-AR2 Bear Stearns 2007- AR2 v. EMC Delaware 6861 9/14/2011 2/28/2007 Less than 6 years $778,678,000 MSM 2006-45L MSM 2006-4SL v. Morgan Stanley N.Y. State 650579/2012 2/29/2012 3/30/2006 Less than 6 years $275,843,000 ACE 2006-ASAP2 ACE 2006-ASAP2 v. DBSP N.Y. State 651936/2013 3/29/2012 3/30/2006 Less than 6 years $554,463,000 HVMLT 2006-BU1 HVMLT 2006-131.11 v. Greenwich N.Y. State 650998/2012 3/29/2012 3/30/2006 Less than 6 years $489,234,000 MARM 2006-0A1 MARM 2006-0A1 v. UBS N.Y. State 651282/2012 4/19/2012 4/20/2006 Less than 6 years $1,111,556,000 ACE 2006-HE2 ACE 2006-HE2 v. DBSP N.Y. State 651414/2012 4/27/2012 4/28/2006 Less than 6 years $917,017,000 MABS 2007-WMC1 MABS 2007-WMC1 v WMC D. Minn. 12-cv-3575; 12- 1831 5/4/2012 2/6/2007 Less than 6 years $946,555,000 SACO 2006-5 SACO I Trust 2006-5 v. EMC N.Y. State 651820/2012 5/25/2012 4/28/2006 Less than 6 years $667,251,000 SACO 2006-3 SACO I Trust 2006-5 v. EMC N.Y. State 651820/2012 5/25/2012 2/28/2006 Less than 6 years $698,275,000 SACO 2007-2 SACO I Trust 2006-5 v. EMC N.Y. State 651820/2012 5/25/2012 2/28/2007 Less than 6 years $203,535,000 SACO 2006-6 SACO I Trust 2006-5 v. EMC N.Y. State 651820/2012 5/25/2012 5/30/2006 Less than 6 years $574,713,000 ACE 2006-ASAP3 ACE 2006-ASAP3 N.Y. State 651840-2012 5/29/2012 5/30/2006 Less than 6 years $713,984,000 WMALT 2006-AR4 WMALT 2006-AR4 v. JPM N.Y. State 651841/2012 5/29/2012 5/30/2006 Less than 6 years $959,944,300 Appendix A: Litigation Filed Within Six Years of the Closing Date Trusts At Issue Case Court Docket Number Date Litigation Was Filed Closing Date Litigation Filed More or Less Than 6 Years After Closing Date Value of Securities in Trust WMALT 2006-AR8 WMALT 2006-AR4 v. N.Y. State 651841/2012 5/29/2012 9/27/2006 Less than 6 years $1,049,915,200 JPM WMALT 2006-AR9 WMALT 2006-AR4 v. N.Y. State 651841/2012 5/29/2012 10/24/2006 Less than 6 years $1,087,842,100 JPM LXS 2006-GP2 LXS 2006-GP2 v. S.D.N.Y. 651862/2012; 5/30/2012 5/31/2006 Less than 6 years $1,123,528,000 Greenpoint 12-7935 LXS 2006-GP3 LXS 2006-GP2 v. S.D.N.Y. 651862/2012; 5/30/2012 6/30/2006 Less than 6 years $1,007,291,000 Greenpoint 12-7935 LXS 2006-GP4 LXS 2006-GP2 v. S.D.N.Y. 651862/2012; 5/30/2012 7/31/2006 Less than 6 years $1,254,825,000 Greenpoint 12-7935 00ML 2006-2 Homeward S.D.N.Y. 651885/2012; 5/31/2012 6/22/2006 Less than 6 years $1,465,500,000 Residential v. Sand 12-5067 Canyon BSABS 2007-AR4 Bear Stearns 2007- Delaware 7546 6/4/2012 2/9/2007 Less than 6 years $1,174,420,200 AR4 v. EMC MABS 2006-WMC3 WMC v. MABS 2006- D. Minn. 12-1370 6/8/2012 9/7/2006 Less than 6 years $891,282,000 WMC3 MASS 2007-WMC1 WMC v. MABS 2007- D. Minn. 12-1372 6/8/2012 2/6/2007 Less than 6 years $946,555,000 WMC1 ACE 2006-HE3 ACE 2006-HE3 v. N.Y. State 652231/2012 6/26/2012 6/27/2006 Less than 6 years $1,094,776,000 DBSP BSABS 2006-AR1 Bear Stearns 2006- Delaware CA7658 6/27/2012 7/31/2006 Less than 6 years $973,112,000 AR1 v. EMC HASCO 2006-WMC1 HASCO 2006-WMC1 v. WMC D. Conn. 12-969 7/2/2012 8/4/2006 Less than 6 years $820,195,000 HEAT 2006-5 HEAT 2006-5 v. DU N.Y. State 652344/2012 7/3/2012 7/5/2006 Less than 6 years $835,975,050 HEAT 2006-6 HEAT 2006-5 v. DLI N.Y. State 652344/2012 7/3/2012 8/1/2006 Less than 6 years $835,975,050 HEAT 2006-7 HEAT 2006-5 v. DLl N.Y. State 652344/2012 7/3/2012 10/4/2006 Less than 6 years $1,069,750,050 Appendix A: Litigation Filed Within Six Years of the Closing Date Trusts At Issue Case Court Docket Number Date Litigation Was Filed Closing Date Litigation Filed More or Less Than 6 Years After Closing Date Value of Securities i n Trust BSMF 2006-SL1 Bear Stearns Mortgage Funding Trust 2006-SL1 v. EMC Delaware CA7701 7/16/2012 7/28/2006 Less than 6 years $477,761,000 NAAC 2006-AF2 NAAC 2006-AF2 v. Nomura N.Y. State 652614-2012 7/27/2012 7/28/2006 Less than 6 years $754,573,000 MSM 2006-10SL Morgan Stanley 2006- 10SL v. Morgan Stanley N.Y. State 652612/2012 7/27/2012 7/28/2006 Less than 6 years $275,384,000 ACE 2006-ASAP4 ACE 2006-ASAP4 v. DBSP N.Y. State 652640/2012 7/30/2012 7/31/2006 Less than 6 years $555,069,000 ACE 2006-FM1 ACE 2006-FM1 v. DBSP N.Y. State 652978/2012 8/24/2012 8/25/2006 Less than 6 years $1,412,660,000 ACE 2006-FM1 ACE 2006-FM1 v. DBSP II N.Y. State 652985/2012 8/24/2012 8/25/2006 Less than 6 years $1,412,660,000 MABS 2006-11E3 MABS 2006-HE3 v. WMC D. Minn. 11-cv-2542 8/30/2012 9/1/2006 Less than 6 years $997,727,000 ACE 2006-NC2 ACE 2006-NC2 v. DBSP N.Y. State 653161/2012 9/11/2012 9/15/2006 Less than 6 years $843,325,000 ACE 2006-HE4 ACE 2006-HE4 v. DBSP N.Y. State 653394/2012 9/27/2012 9/28/2006 Less than 6 years $679,633,000 ACE 2006-ASAP5 ACE 2006-ASAP5 v. DBSP N.Y. State 653406/2012 9/27/2012 9/28/2006 Less than 6 years $795,572,000 ACE 2006-HE4 ACE 2006-HE4 v. DBSP II N.Y. State 653404/2012 9/27/2012 9/28/2006 Less than 6 years $679,633,000 MSM 2006-13ARX MSM 2006-13ARX v Morgan N.Y. State 653429/2012 9/28/2012 9/29/2006 Less than 6 years $603,133,100 OOML 2006-3 Homeward Residential v. Sand Canyon S.D.N.Y. 12-cv-7319 9/28/2012 10/16/2006 Less than 6 years $1,456,500,000 Appendix A: Litigation Filed Within Six Years of the Closing Date Trusts At Issue Case Court Docket Number Date Litigation Was Filed Closing Date Litigation Filed More or Less Than 6 Years After Closing Date Value of Securities 1 . n Trust NH ELI 2006-FM2 NHELI 2006-FM2 v. Nomura N.Y. State 653783/2012 10/29/2012 10/31/2006 Less than 6 years $1,175,230,000 HEMT 2006-5 HEMT 2006-5 v. DU N.Y. State 653787/2012 10/30/2012 10/31/2006 Less than 6 years $784,000,100 DASM 2006-0A1 DASM 2006-0A1 v. DBSP S.D.N.Y. 12-cv-8594 11/27/2012 12/29/2006 Less than 6 years $637,716,000 SABR 2006-WM3 SABR 2006-WM3 v WMC D. Conn. 12-cv-1699 11/30/2012 12/1/2006 Less than 6 years $970,478,000 JPMAC 2006-WMC4 WMC v. JPMAC 2006- WMC4 D. Minn. 12-cv-3146 12/19/2012 12/20/2006 Less than 6 years $1,834,557,000 SABR 2006-WM4 SABR 2006-WM4 v. WMC S.D.N.Y. 654522/2012; 13-584 12/27/2012 12/28/2006 Less than 6 years $976,271,000 ACE 2007-WM1 ACE 2007-WM1 v. DBSP N.Y. State 650310/2013 1/28/2013 1/29/2007 Less than 6 years $834,163,000 ACE 2007-WM1 ACE 2007-WM1 v. DBSP II N.Y. State 650312/2013 1/28/2013 1/29/2007 Less than 6 years $834,163,000 ACE 2007-HE1 ACE 2007-HE1 v. DBSP N.Y. State 650327/2013 1/29/2013 1/30/2007 Less than 6 years $900,793,000 MSM 2007-2AX MSMT 2007-2AX v. Morga n Stanley N.Y. State 650339/2013 1/30/2013 1/31/2007 Less than 6 years $645,441,100 NHELI 2007-2 NHELI 2007-2 v. Nomura N.Y. State 650337/2013 1/30/2013 1/31/2007 Less than 6 years $882,696,000 ACE 2007-HE3 ACE 2007-HE3 v. DBSP S.D.N.Y. 13-1869 3/20/2013 3/22/2007 Less than 6 years $587,724,000 ACE 2007-WM2 ACE 2007-WM2 v. DBSP S.D.N.Y. 13-cv-2053 3/27/2013 3/30/2007 Less than 6 years $752,929,000 NHELI 2007-3 NHELI 2007-3 v. Nomura N.Y. State 651124/2013 3/28/2013 4/30/2007 Less than 6 years $1,089,851,000 HVMLT 2007-2 HVMLT 2007-2 v. Just Mortgage N.Y. State 651149/2013 3/29/2013 3/28/2007 Less than 6 years $1,310,252,000 Appendix A: Litigation Filed Within Six Years of the Closing Date Trusts At Issue Case Court Docket Number Date Litigation Was Filed Closing Date Litigation Filed More or Less Than 6 Years After Closing Date Value of Securities in Trust OOMLT 2007-4 OOMLT 2007-4 v. Sand Canyon S.D.N.Y. 13-cv-2107 3/29/2013 4/6/2007 Less than 6 years $1,134,600,000 MSAC 2007-HE5 MSAC 2007-HE5 v. WMC N.Y. State 651519/2013 4/26/2013 4/27/2007 Less than 6 years $1,132,272,000 HEAT 2007-3 HEAT 2007-3 v. DU N.Y. State 651563/2013 4/30/2013 5/1/2007 Less than 6 years $527,450,050 HASCO 2007-HE2 HASCO 2007-HE2 v. HSBC N.Y. State 651627/2013 5/3/2013 5/4/2007 Less than 6 years $697,753,000 SABR 2007-BR3 SABR 2007-BR2 v. WMC N.Y. State 651789/2013 5/17/2013 6/13/2007 Less than 6 years $975,906,000 SABR 2007-BR5 SABR 2007-BR2 v. WMC N.Y. State 651789/2013 5/17/2013 7/10/2007 Less than 6 years $791,222,000 MSMLT 2006-14SL MSMLT 2006-145L v. Morgan Sta n ley N.Y. State 652763/2012 8/8/2012 10/31/2006 Less than 6 years $321,238,000 MSMLT 2007-4SL MSMLT 2006-14SL v. Morgan Sta nley N.Y. State 652763/2012 8/8/2012 2/28/2007 Less than 6 years $278,958,000 ACE 2007-HE5 ACE 2007-HE5 v. DBSP S.D.N.Y. 13-3687 5/31/2013 6/29/2007 Less than 6 years $397,991,000 ACE 2006-SL2 ACE 2006-SL2 v. DBSP N.Y. State 650980/2012; 651854/2014 3/28/2012 3/28/2006 6 years exactly $501,540,000 HVMLT 2006-7 HVMLT 2006-7 v. Greenwich N.Y. State 652843/2012 8/14/2012 8/14/2006 6 years exactly $1,996,709,000 SABR 2006-WM2 SABR 2006-WM2 v WMC D. Conn. 12-cv-1538 10/26/2012 10/26/2006 6 years exactly $792,162,000 JPMAC 2006-WMC4 JPMAC 2006-WMC4 v. WMC N.Y. State 654464/2012 12/20/2012 12/20/2006 6 years exactly $1,834,557,000 HEAT 2007-1 HEAT 2007-1 v. DU N.Y. State 650369/2013 2/1/2013 2/1/2007 6 years exactly $970,000,050 NMFT 2007-1 NHELI 2007-1 v. Novation N.Y. 5tate 650693/2013 2/28/2013 2/28/2007 6 years exactly $1,813,274,000 SASCO 2007-BC2 SASCO 2007-BC2 v. Equifirst N.Y. State 650692/2013 2/28/2013 2/28/2007 6 years exactly $619,137,000 Appendix A: Litigation Filed Within Six Years of the Closing Date Trusts At Issue Case Court Docket Number Date Litigation Was Filed Closing Date Litigation Filed More or Less Than 6 Years After Closing Date Value of Securities in Trust SAST 2007-1 SAST 2007-1 v. Saxon N.Y. State 650813/2013 3/7/2013 3/7/2007 6 years exactly $592,928,000 HASCO 2007-HE1 MASCO 2007-HE1 v. HSBC N.Y. State 650832/2013 3/8/2013 6/8/2007 6 years exactly $986,125,000 HEAT 2007-2 HEAT 2007-2 v. DU N.Y. State 651174/2013 4/2/2013 4/2/2007 6 years exactly $1,149,600,050 SABR 2007-BR1 SABR 2007-BR1 v. Ba rclays N.Y. State 651338/2013 4/12/2013 4/12/2007 6 years exactly $621,683,000 GSR 2007-0A1 GSR 2007-0A1 v. Quicken Loans 2d Cir. 651675/2013; 13-6482; 14- 5/8/2013 5/8/2007 6 years exactly $1,143,744,300 SABR 2007-BR2 SABR 2007-BR2 v. WMC N.Y. State 651789/2013 5/17/2013 5/17/2007 6 years exactly $730,268,000 MSAC 2007-HE6 MSAC 2007-HE6 v. Decision One Cook Cnty (III.) 2013-L-5823 5/31/2013 5/31/2007 6 years exactly $1,180,665,000 MSAC 2007-NC3 MSAC 2007-NC3 v. Morgan Stanley N.Y. State 651959/2013 5/31/2013 5/31/2007 6 years exactly $1,021,000,000 HASCO 2007-NC1 HASCO 200741C1 v. HSBC N.Y. State 652001/2013 6/5/2013 6/5/2007 6 years exactly $976,663,000 Total Value $74,236,463,900 Appendix B: Litigation Filed More Than Six Years After the Closing Date Trusts At Issue Case Court Docket Number Date Litigation Was Filed Closing Date Litigation Filed More or Less Than 6 Years After Closing Date Value of Securities in Trust FFML 2006-FF5 FFML 2006-FFS v. HSBC N.Y. State 651535/2012 5/4/2012 4/26/2006 More than 6 years $1,188,076,000 MABS 2006-WMC2 WMC v. MABS 2006- WMC2 D. Minn. 12-1371 6/8/2012 5/30/2006 More than 6 years $745,078,000 MSAC 2006-WMC2 MSAC 2006-WMC2 v. WMC D. Conn, 12-933 6/25/2012 5/25/2006 More than 6 years $2,531,401,000 FFML 2006-FF8 FFML 2006-FF8 v. Greenwich N.Y. State 652285/2012 6/28/2012 6/6/2006 More than 6 years $826,799,000 GE-WMC 2006-1 GE-WMC 2006-1 v. WMC S.D.N.Y. 652928/2012; 12- 7096 8/21/2012 8/1/2006 More than 6 years $678,900,000 HEMT 2006-1 HEMT 2006-1 v. DU N.Y. State 156016/2012 8/31/2012 2/28/2006 More than 6 years $560,330,200 HEMT 2006-3 HEMT 2006-1 v. DU N.Y. State 156016/2012 8/31/2012 6/30/2006 More than 6 years $391,600,100 HEMT 2006-4 HEMT 2006-1 v. DU N.Y. State 156016/2012 8/31/2012 8/30/2006 More than 6 years $515,280,100 SACO 2006-3 SACO I Trust 2006-3 v. EMC N.Y. State 653871/2012 11/8/2012 2/28/2006 More than 6 years $698,275,000 MLMI 2006-RM4 MLMI 2006-RM4, RM5 v. Merill N.Y. State 654403/2012 12/18/2012 9/27/2006 More than 6 years $547,934,100 MLMI 2006-RM5 MLMI 2006-RM4, RM5 v. Merit! N.Y. State 654403/2012 12/18/2012 10/27/2006 More than 6 years $520,625,100 HVMLT 2006-14 HVMLT 2006-14 v. Greenwich N.Y. State 654487/2012 12/21/2012 12/20/2006 More than 6 years $2,401,466,000 WBCMT 2006-C28 WBCMT 2006-C28 v. Dexia S.D.N.Y. 12-cv-9412 12/27/2012 10/31/2006 More than 6 years $3,066,568,000 MSAC 2007-NC1 MSAC 2007-NC1 V. Morgan Stanley N.Y. State 650291/2013 1/25/2013 1/19/2007 More than 6 years $1,214,379,000 CMLT 2007-AMC3 CMLT 2007-AMC3 v. Citi S.D.N.Y. 13-2843 4/30/2013 3/30/2007 More than 6 years $580,529,000 Suntrust 2007-1 Suntrust 2007-1 v. Suntrust N.D. Ga. 13-1635 5/14/2013 4/30/2007 More than 6 years $350,637,000 LXS 2006-4N Lehman XS 2006-4N v. Greenpoint 2d Cir. 13-cv-4707; 14-399 7/13/2013 3/31/2006 More than 6 years $1,358,230,000 Appendix B: Litigation Filed More Than Six Years After the Closing Date Trusts At Issue Case Court Docket Number Date Litigation Was Filed Closing Date Litigation Filed More or Less Than 6 Years After Closing Date Value of Securities in Trust MSAC 2007-HE6 MSAC 2007-HE6 v. WMC D. Conn. 13-1347 9/13/2013 5/31/2007 More than 6 years $1,180,665,000 ACE 2007-HE4 ACE 2007-HE4 v. DBSP S.D.N.Y. 13-2828 4/29/2013 4/20/2007 More than 6 years $1,007,066,000 CMLTI 2007-AHL2 CMLTI 2007-AH2 v. Citi N.Y. State 653816-2013 10/31/2013 5/10/2007 More than 6 years $507,851,000 WMAC 2006-WMC2 JPMAC 2006-WMC2 v. WMC N.Y. State 653831/2013 11/1/2013 6/28/2006 More than 6 years $1,221,445,000 ACE 2007-ASAP2 ACE 2007-ASAP 2 v. DBSP N.Y. State 651936/2013 5/30/2013 5/17/2007 More than 6 years $555,678,000 NAAC 2007-1 NAAC 2007-1 v. Nomura N.Y. State 652842/2014 9/17/2014 5/8/2007 More than 6 years $1,576,665,000 MLAN 2007-A3 MLAN 2007-3 v. Merrill N.Y. State 652727/2014 9/5/2014 4/30/2007 More than 6 years $483,874,100 CMLTI 2007-AR7 CMLTI 2007-AR7 v. Citi N.Y. State 653930/2014 10/1/2013 5/11/2007 More than 6 years $831,885,100 Total Value $25,541,236,800