Insurers Pay Pretender Lenders and Then Pursue Homeowner for the “Loss”


see Insurers pay “losses” on mortgages and then pursue borrowers for recovery of payment

A big area of confusion in the foreclosure cases is the impact of insurance claims and payments with respect to insured mortgages and insured mortgage bonds. So let’s start with the fact that there are many types of insurance contracts that affect the balance to be proven in a foreclosure case. The simplest rule to follow which has been stated in a number of cases, is that if the party seeking foreclosure has already received payments ON THAT LOAN then the balance should be correspondingly reduced. But that reduction is between the pretender lender and the borrower. That doesn’t mean that whoever paid the money to the pretender lender can’t pursue the homeowner for the amount paid. But it does affect the foreclosure because the insurance or third party payment (FDIC loss sharing, for example or Fannie or Freddie buyout or guarantee) affects the claimed liability of the borrower.

If you ask the banks about these payments you get stonewalled. And depending upon the timing of the payment it might invalidate the claim of a default, a notice of default and notice of sale. It could also negate the right to foreclose — again depending upon the timing of the payment.

There have been only 2,000 cases in which the insurers have paid the pretender lender and then fled a lawsuit against the homeowner/borrower. They are claiming they paid for a loss incurred by the pretender lender and that the borrower was essentially unjustly enriched and also claiming subrogation (whatever rights the pretender lender had against the borrower goes to the party making the payment to the pretender lender). The problem here of course is that while only 2,000 cases have been field against borrowers by insurers, there are hundreds of thousands of payments received by the pretender lenders.

And the fact that the insurer paid does NOT mean (but will often be presumed anyway) that the loss was actually incurred by the pretender lender. It is one thing to mistakenly apply presumptions under the UCC in which the pretender lender gets to foreclose. It is quite another when the insurer is making a claim that it paid a loss on your mortgage. They must prove the loss. And that means they not only must prove that they paid the claim, but that the claim was real.

For that reason, I am suggesting to foreclosure defense lawyers that they include, in discovery, the insurers and other third parties who appear to have some connection to the subject loan. This might present an opportunity to determine whether any real loss was present and could open the door to argue the reality: that the foreclosing parties neither owned nor had any risk of loss on the subject loans and that they did not represent any owner or other party entitled to enforce.

The take away here is that in a huge number of cases there are or were third party payments that reduced the alleged loss of the creditor or alleged creditor AND depending upon when those payments were made if might have the effect of rendering a notice of default void or even a foreclosure judgment where the redemption rights of the homeowner were affected by an incorrect statement of the loss. In actions for deficiency, the insurers are essentially cherry picking cases in which they think the borrower can pay the alleged loss. It also might represent an overpayment. For example if the third party payment was on a GSE guaranteed loan, did the pretender lender submit claims for both the insurance payment AND the guarantee payment? Under the terms of the note, the borrower might well be entitled to disgorgement of the overpayment, especially if it totals more than the claimed balance due on the alleged loan.

Insurance on the mortgage bonds is the same but more complicated and harder to present in court. The mortgage bond derives its value from the loan. That is why it is called a derivative. In nearly all cases the payment received by the banks (supposedly on behalf of the investors) is received long before a default on any specific loans and there is NO SUBROGATION. The insurers cannot step into the shoes of the pretender lender under those contracts. The “loss” is a claimed reduction in value called a “credit event” that is declared by the Master Servicer in sole discretion. The payment might be all or less than all of the par value of the mortgage bond.

Whatever the amount, it reduces the alleged loss as between the homeowner and any party making a claim for foreclosure based upon an alleged loss incurred from their default. This is true because the balance due to the investors under the mortgage bond has been covered already by the “credit event” which includes many things other than default on any specific loans, so the payment might include a claimed loss from default on a specific group of loans and other factors. In any event, the investors’ books if they were available would show a lower balance due than what any servicer would show. And that would mean that the default notice might be incorrect especially in terms of the reinstatement amount in the paragraph 22 letter.

And because these insurance contracts provide for no subrogation (no claims can be brought by insurer against the homeowner) the reduction in the balance is a reduction of the balance due from the borrower; and THAT is because if the borrower paid the full amount due on the claims of the pretender lender there would be a windfall or “free ride” to the pretender lender (adding insult to injury).

Comments Welcome

30 Responses

  1. gene, you said:
    “The Court ruled that even with the additional complexities, the Purchase and Sale Agreement ensured that the loans were a bonifide purchase and not a pledge.”
    Well now, I find that extremely interesting. If the court’s reliance were on the PSA (for a sale v a pledge), what you’re saying the court identified / described was an Article 9 transfer by way of the PSA. Even though / or if the court meant endorsements and assignments as the
    “additional complexities”, it seems unavoidable to me that the court found the PSA to be most (if not exclusively – have to say this because I haven’t seen that case though I would really like to hint hint) dispositive as to a sale. Also imo, the dot transfers would have been perfected against the properties to the extent of the clear identification of the properties had the psa been recorded in land records. Maybe not quite that simple, but anyway, distracting here. The point is the court id’d an Article 9 transfer, not Article 3 events. And just a reminder, I’ve got material at scribd wherein MERS avers these notes are regulated by 9, not 3.
    Some of you here are way the heck ahead of the rest of the class (including me) on the securities issues (good thing and maybe you’ll share more). I’ve only seen a couple PSA’s and they fail to identify the properties imo with enough specificity to get the job (transfer) done.
    That can’t be an accident. But that, too, is distracting because, again, the main attraction is that the court specifically relied on article 9 transfer.
    Sure like to see that case.

  2. gene, please contact me at

  3. iwantmynpv,

    Interest Rate Swaps were almost always set up with the establishment of the Trust. CDS seldom were even in 2006 and 2007.

    One of the guys I was involved with in 2013 and 2014 was actually one of the key players in the ISDA. I found out much through him that I cannot disclose due to various reasons including ongoing litigation. I also learned from him and others more than I ever wanted to learn about MBS Securitizations and why that was such a failure.

    Provide me with an email and I can send you contact info.

  4. This is leading to some very interesting information iwantmynpv and Gene. Please continue to post. Thanks

  5. Gene, I have read many trusts were the counter-party was established at the time the Depositor was pool picking from the loan pool, the loans were chosen, and than the whole trust, yes the entire trust account transferred to the Trustee, which never received the proceeds direct from the underwriters..

    Can we talk off the website?

  6. Ivent,

    I was involved in a case whereby the issue of Pledge or Sale was a key point of the litigation. The case was far more involved and complex than the typical case one would expect with MBS litigation and what you are trying to argue.


  7. Fraud in the Procurement.

  8. BTW, most CDS were for 5 years duration only, though some were 10 years. Essentially the MBS CDS are now mostly expired.

  9. IwantmyNPV,

    Credit Enhancements on Private MBS took many forms in addition to over collateralization. Insurance was just another one.

    With the Private MBS, some loans would carry PMI agreed to and paid by the borrower monthly. That depended upon the lender policies and loan to value issues, how long the loan would be retained in its portfolio, and any Purchase and Sale Agreements. This is what most perceive mortgage insurance as being.
    Then there were the monolines that were contracted by the Depositor to insure high ltv loans in Trusts. Borrrowers did not pay this insurance, but instead over collateralization would usually pay the premium.

    Some lenders like WAMU “self-insured” the loans. This meant that for loans from 80-90% ltv, WAMU increased the interest rate by .5% instead of having PMI.

    Interest Rates on MBS loans were determined by a “Matrix” which took into account ltv, credit score, and income documentation. (Occupancy was a lesser consideration.) The start rate would be determined by this, and also the margin which would determine the rate when the loans adjusted. Alt A Trusts would usually have margins of 2.25 or 2.75, though you could find some higher. Higher margins were used by the originators to increase profit from selling the loans.

    “Subprime” Trusts, when would often include A paper loans had margins from 4.5 to over 7.5.The same factors as with Alt A would determine the margins, except for some originators who would give everyone high margins for profits.

    GSE loans were a bit different. The same risk factors would increase interest rates certainly, and well it should. (Don’t even get me started on the fact that the increased rates actually increased risk further.) But PMI was required on ltv’s above 80% for all loans unless subordinate financing existed. And FHA was with all loans, no exceptions.

    Interest rates and margins were also increased for the purpose of brokers obtaining a Yield Spread Premium on loans. That is also its own story based upon what type of loan it was.

    Swaps…..I presume you mean both Interest Rate Swaps and Credit Default Swaps.

    I spent 18 months in 2013 and 2014 in weekly meetings with a group of people trying to develop new methodologies for determining more effective default risk analysis of individual loans. Among the people was the former head of a well-known bank who purchased credit default swaps, interest rate swaps, and also put together securitizations. This was a real education, and in many ways, not a good one.

    To make it very simple, Interest Rate Swaps were designed to offset the risk of interest rate changes, while having to still pay out money at higher rates. For example if you had investments paying 4%, but outgoing at 6%, you would lose money and could go out of business. So you would buy Swaps whereby if the rates went down, the Swap would “kick in” and the changes would be offset. And if rates went up, the Swap seller would be the benefactor. (See, very simple explanation……it is much more complex.) When dealing with MBS, the Swaps would be purchased at the beginning of the transaction, and would be part of the money used with the startup of the Trust. (That goes to a whole different set of circumstances of how the prices of loans and bonds were determined which is REALLY confusing, and is the misconception of NG’s Tier 2 YSP.)

    Credit Default Swaps were a different animal. They did not even exist on MBS until late 2005. That was when Michael Burry got Deutsche Bank to issue CDS on 2003 and 2004 Trusts that he had identified as likely to fail and wanted to “gamble” on. Deutsche Bank took several months, started selling CDS in late 2005, and the race was on.

    CDS were a purchase usually after the fact, meaning the Trust had already been created. Anyone could buy a CDS gambling on whether the loans would fail or not. (If we were brokers, you and I could buy them.) Yes, some Trusts had CDS as origination, but these were not a common feature as compared to after purchases. Essentially, it was like gambling on the Super Bowl. If your team won the Super Bowl, you would not pay the winning team, and if you lost, you lost your money.

    The CDS Contract was a Party – Counter Party transaction, just like the Interest Rate Swaps and nothing else. And a Virginia Court held this to be so, ruling that the identified Trust in a CDS was a “reference point” and nothing else. Just like my Super Bowl analogy.

    For tranche protection, it would be the interest rate swaps that would attempt to stabilize the income stream along with other credit enhancements in case of defaults. CDS were not used in most cases.

    These are very simple explanations designed to give you a better understanding of the products and what went on. There are so many different factors involved that books have been written on each subject for the professional Risk Manager.
    Sorry for this being so long………

  10. Deborah,

    I am not sure of what you are trying to say.

  11. @gene, you are one of the few that I always read on this blog. You’re last comment about insurance / credit enhancement.

    Most credit enhancement in any REMIC Trust is structured through lower rated tranche payments supporting the higher tiers and overcollat.

    The question I make is – at origination all sub prime borrowers and 30% of prime borrowers approved for an agency loan pay credit insurance through a higher rate at closing.

    DO / DU was the decision engine that determined the parameters of the loan. When Fannie and Freddie could not compete with the PLMBS, they hired Newt Gingrich to lobby for relaxed standards for the GSE’s. Soon, thereafter enhanced DO / DU decisions and stated income loans were acceptable for purchase in agency pools.

    These loans carried a higher interest tag, which allegedly was used to pay the swap premium each month. Same thing with autos and school loans, higher credit risk, higher interest rate. This higher rate of return was not used to purchase MIP – it was used to support the upper tier security tranches.

    Or am I way off base…

  12. “MERS was created by the mortgage banking industry to streamline the mortgage transfer process by using electronic commerce to eliminate paper. MERS is an innovative process that simplifies the way mortgage ownership and servicing rights are originated, sold, and tracked.”
    Affidavit of Cynthia A Mech, “MERS Assistant Secretary” May 12, 2008. It’s time to say it again:

  13. Black’s 4th –

    pledge – the necessary element to constitute a contract one of “pledge” are:

    Possession of the pledged property must pass from the pledger to the pledgee;

    The legal title to the property must remain, in the pledgor; and the pledgee must_have _a_lien_on_the_property_for the payment of a debt or the performance of an obligation due him by the pledgor, and the pledgee must _have__a_lien_on_the_property_for the payment of a debt or the performance of an obligation due him by the pledgor or some other person while in a “chattel mortgage” the legal title passes to the mortgage subject to a defeasance…..A bailment of personal property as a security for a debt, or other obligation. The specific article delivered to the
    creditor in security is called a pledge or pawn.

  14. Gene
    Says on my trustees deed upon sale ” recording requested by fidelity nat title on behalf of trustee corp ” – thats the forecloseure mill guys then go figure it says mail to and tax statements to,… ( aka servicer)
    Does not necessarily mean it’s true, but read all the small print on those trustees deeds upon sale its a total crock
    Comments welcome

  15. What is to be pledged? PLEGHS, ACQUIETANDIS, WRITDE – The name of an ancient writ in the English Law, which lies where a man becomes pledge or surety for another to pay a certain sum of money at a certain day; after that day, if the debtor does not pay the debt, and the surety be compelled to pay, he shall have this writ to compel the debtor to pay the same.

    A man is a surety to his government assigned artificial person, and that is a debt to government. That debt can be forced from the surety via “due process” of government courts via similar code today.

    Pledge, contracts. He who becomes security for another, and, in this sense, everyone who becomes bail for another is a pledge.

  16. Pledger – The same as a pawner. (q.v.)

    Pledgee – The same as pawnee

    Pledge or Pawn Contracts. These words seem indifferently to convey the same idea. Sir William Jones defines a pledge to be a bailment of goods by a debtor to his creditor for a thing to detain as
    delivered to another as a pawn, to be
    security for money borrowed of him by
    the bailor – and this, he adds, is called
    the Latin vadium, and in English, a pawn
    or pledge. According to Judge Story, it
    may defined to be a bailment of personal
    property, a security for some debt or
    The term pledge or pawn is confined
    to personal property, as security for
    service, debt or engagement; and where
    real or personal property is transferred.

    Things which are the subject of pledge or pawn are ordinarily goods and chattels but money, negotiable instruments. Actions and indeed any other valuable thing of a personal nature, such as patent rights and transcripts, may, by the common, law be delivered by a pledge.

    It is the essence of the contract that there should be an actual delivery of the thing.

    It is essential that the things should be delivered as a security for some debt or engagement. – Bouvier’s, 1856

  17. Pledges: A mortgage maybe with or without possession but a pledger cannot be without possession.

    The legal assignment is the pledge/security aka “the Note.”

  18. The subsequent formation of the United States was for all intents & purposes a “bailout” of the bankrupt Congress of the Confederacy, conveying the debt of the masons over to the new constituted Corporation called United States.

  19. What precisely are those “pledges” of exactly? The free will of another.

    Fraudclosure is in fact a “secret divorce proceeding” designed mainly by the “Freemason lawyers,” to secretly yet openly “strip” ones wife of all of her assets by swapping out her legal title to her person with “an unknown and non-record claimant” who is more likely than not, to be one of many of your soon to be exes girlfriends. Or maybe an entire group of his girlfriends who are a real and actual, Genuine & Authentic “gaggle of geese.” It could even be prey tell, one or two of the female “Attorney’s for Plaintiff’s” who secretly work for your
    soon to be ex hubby. Fraudclosure is a really evil lying freak show. Who knows, as sick, sordid and twisted as this all is, it could actually and really be your own family members who are involved in this unlawful and illegal AIG PRISM PROGRAM “HAZARD INSURANCE” MORTGAGE FRAUD SCAM.”

    This sick, sadistic, twisted and criminally sadistic bunch of criminal, control freak losers are all more or less, Satanist/Luciferians who are almost all violent criminal sex abusers, mainly of children.


    They hate all Christians but mainly they hate all Catholics, especially those Catholics who believe that one God is
    the Creator of all Creation.

    The wife is almost always declared “nuts” by manufactured lies brought by the “Plaintiff’s Attorney’s” who all work for the “Freemason Lawyers,” who are “the judges” at “the top of the food chain.”

  20. The “underlying docs” that I am pertaining to are all of those “bear naked pledge agreements” aka “partial grant deeds” that convey nothing Genuine or Authentic. Meaning those “pledges” are highly illegal. The reason being is that there is not a Genuine or Authentic writing anyplace to be found that could be firmly attached to any of those.

    With nothing firmly attached in actual “written legal written form” in which the “Plaintiff’s” could possibly state a valid,
    legal claim all of “the Notes” are quite frankly Counterfeit U.S Bank Notes that are “Securities Frauds.”

    That also means that any and all “Investments” are fraudulent because they are all “Red Flag Securities,” meaning fake, phony and fraudulent.

    That also means the Article 8 “Investment Accounts” that are “linked” to these fraudulent investments are fake, phony and
    fraudulent as well.

    Those “investors” whose banks drew upon those “accounts” wrongfully committed “Bank Fraud, “Electronic Wire Fraud,” “Illegal use of the uncopywrited digital signature of another to gain unjust enrichment,” “Securities Fraud,”
    etc, etc, etc.

    And therefore, they all need to be arrested by the Proper Legal Authorities

  21. “Insurers Pay Pretender Lenders and Then Pursue Homeowner for the “Loss”

    Assuming that it is true (I haven’t read enough on the subject to be able to editorialize that it is a generalized problem nationwide and, based on NG’s figure of 2,000, it is a rare occurrence), that alleged debt would be unsecured, therefore dischargeable in BK. When someone has lost a house to FC, it is fair to venture that he/she doesn’t have anything left worth going after. That’s when BK comes handy, not in lieu of a good FC fight.

    Unless, of course, he/she had already played and lost the BK card to try and fight FC, in which case he/she would be barred from playing it again for quite some time, hence my consistently strong stand, from day one, against fighting FC by filing for BK: it’s a bad strategy, it has generally not been very successful and it can seriously backfire.

  22. @ Shadowcat – to go after borrower? Do they have an obligation to borrower to notify borrower if insurance claim is made since the borrower was the one who paid for the title insurance at closing? Can borrower expect truthful answers if they contact title insurance company and ask if ever an insurance claim was submitted by a servicer (claims they paid and claims they did not pay) during the course of the loan – seems like they would have a professional duty to the borrower too???

  23. Here NG goes again. He really needs to understand that almost all insurance claims are made AFTER the foreclosure has occurred, not before. Therefore the loan could not have been paid prior to foreclosure, and hence the monthly payments were not made.

    Furthermore, these are agreements with the homeowner that spell out the details and will say that Insurance companies going after the borrower for losses is acceptable, if allowed by state law.

    For Private MBS loans, the agreements are between the insurer and the Trust. It is a credit enhancement. The borrower has no participation at all and does not pay extra. Hence, there is nothing for the borrower.

    There are some mortgage insurance agreements that homeowners could purchase that would pay the mortgage if the homeowner could not for certain stated reasons. In this case, the balance would be reduced, but this would occur only if the loan was still in effect and a foreclosure had not occurred. Even then, one must look at the insurance contract to see what it says about recovery options.

    Now, back to real work. Killing Nationstar on their modification processes and practices…..

  24. It is more about the underlying “docs.” That is where the “unfunded liabilities” are being fraudulently concealed.

  25. I think there are many more hidden documents that we do not know about. What about the notes that were/are being sold multiple times? Are there the same underlying documents for each (fraudulent, forged) note?

  26. That I believe. The entire fraudclosure “event” began and ends with its connections to AIG’s Maurice Greenberg and all of his illicit ties to Larry Silverstein.


    12-12020-mg Doc 320-2 Filed 06/11/12 Entered 06/12/12 00:00:34 Exhibit 2
    Pg 8 of 39

    This RMBS Trust Settlement Agreement is entered into as of May 13, 2012, by and
    between Residential Capital, LLC and its direct and indirect subsidiaries (collectively, “ResCap”
    or the “Debtors”), on the one hand, and the Institutional Investors (as defined below), on the
    other hand (the “Settlement Agreement”). Each of ResCap and the Institutional Investors may
    be referred to herein as a “Party” and collectively as the “Parties.”
    WHEREAS, certain ResCap entities were the Seller, Depositor, Servicer and/or Master
    Servicer for the securitizations identified on the attached Exhibit A (the “Trusts”);
    WHEREAS, certain ResCap entities are parties to certain applicable Pooling and
    Servicing Agreements, Assignment and Assumption Agreements, Indentures, Mortgage Loan
    Purchase Agreements and/or other agreements governing the Trusts (the “Governing
    Agreements”), and certain ResCap entities have, at times, acted as Master Servicer and/or
    Servicer for the Trusts pursuant to certain of the Governing Agreements;
    WHEREAS, pursuant to the Governing Agreements, certain ResCap entities have
    contributed or sold loans into the Trusts (the “Mortgage Loans”);
    WHEREAS, the Institutional Investors have alleged that certain loans held by the Trusts
    were originally contributed in breach of representations and warranties contained in the
    Governing Agreements, allowing the Investors in such Trusts to seek to compel the trustee or
    indenture trustee (each, a “Trustee”) to take certain actions with respect to those loans, and
    further have asserted past and continuing covenant breaches and defaults by various ResCap
    entities under the Governing Agreements;
    WHEREAS, the Institutional Investors have indicated their intent under the Governing
    Agreements for each Trust in which the Institutional Investors collectively hold or are authorized
    investment managers for holders of at least 25% of a particular tranche of the Securities (as
    defined below) held by such Trust either to seek action by the Trustee for such Trust or to pursue
    claims, including but not limited to claims to compel ResCap to cure the alleged breaches of
    representations and warranties, and ResCap disputes such claims and allegations of breach and
    waives no rights, and preserves all of its defenses, with respect to such allegations and putative
    cure requirements;
    WHEREAS, the Institutional Investors are jointly represented by Gibbs & Bruns, LLP
    (“Gibbs & Bruns”) and Ropes & Gray LLP (“Ropes & Gray”) and have, through counsel,
    engaged in arm’s length settlement negotiations with ResCap that included the exchange of
    confidential materials;
    WHEREAS, ResCap contemplates filing petitions for relief under chapter 11 of the
    Bankruptcy Code (the “Chapter 11 Cases”) in the United States Bankruptcy Court for the
    Southern District of New York (the “Bankruptcy Court”);

    Section 7.01 Releases. Except as set forth in Article VIII, as of the Effective Date, with
    respect to each and every Trust for whom the Trustee accepts the compromise contemplated by
    this Settlement Agreement, the Investors, Trustee, Trust, and any Persons claiming by, through
    or on behalf of such Trustee (including Institutional Investors claiming derivatively) or such
    Trust (collectively, the “Releasors”), irrevocably and unconditionally grant a full, final, and
    complete release, waiver, and discharge of all alleged or actual claims, demands to repurchase,
    demands to cure, demands to substitute, counterclaims, defenses, rights of setoff, rights of
    rescission, liens, disputes, liabilities, losses, debts, costs, expenses, obligations, demands, claims
    for accountings or audits, alleged events of default, damages, rights, and causes of action of any
    kind or nature whatsoever, whether asserted or unasserted, known or unknown, suspected or
    unsuspected, fixed or contingent, in contract, tort, or otherwise, secured or unsecured, accrued or
    unaccrued, whether direct or derivative, arising under law or equity, against ResCap that arise
    under the Governing Agreements. Such released claims include, but are not limited to, claims
    arising out of and/or relating to (i) the origination, sale, or delivery of Mortgage Loans to the
    Trusts, including the representations and warranties made in connection with the origination,
    sale, or delivery of Mortgage Loans to the Trusts or any alleged obligation of ResCap to
    repurchase or otherwise compensate the Trusts for any Mortgage Loan on the basis of any
    representations or warranties or otherwise or failure to cure any alleged breaches of
    representations and warranties, (ii) the documentation of the Mortgage Loans held by the Trusts
    including with respect to allegedly defective, incomplete, or non-existent documentation, as well
    as issues arising out of or relating to recordation, title, assignment, or any other matter relating to
    legal enforceability of a Mortgage or Mortgage Note, or any alleged failure to provide notice of
    such defective, incomplete or non-existent documentation, (iii) the servicing of the Mortgage
    Loans held by the Trusts (including any claim relating to the timing of collection efforts or
    foreclosure efforts, loss mitigation, transfers to subservicers, advances, servicing advances, or
    claims that servicing includes an obligation to take any action or provide any notice towards, or
    with respect to, the possible repurchase of Mortgage Loans by the applicable Master Servicer,
    Seller, or any other Person), (iv) setoff or recoupment under the Governing Agreements against
    ResCap, and (v) any loan seller that either sold loans to ResCap or AFI that were sold and
    transferred to such Trust or sold loans directly to such Trust, in all cases prior to the Petition
    Date (collectively, all such claims being defined as the “Released Claims”). For the avoidance
    of doubt, this release does not include individual direct claims for securities fraud or other
    disclosure-related claims arising from the purchase or sale of Securities.
    Section 7.02 Release of Claims Against Investors. Except as set forth in Article VIII,
    as of the Effective Date, ResCap irrevocably and unconditionally grants to the Investors a full,
    final, and complete release, waiver, and discharge of all alleged or actual claims from any claim
    it may have under or arising out of the Governing Agreements. For the avoidance of doubt,
    nothing in this provision shall affect Ally’s rights in any way.
    Section 7.03 Agreement Not to Pursue Relief from the Stay. The Institutional Investors
    agree that neither they nor their successors in interest, assigns, pledges, delegates, affiliates,
    subsidiaries, and/or transferees, will seek relief from the automatic stay imposed by section 362
    of the Bankruptcy Code in order to institute, continue or otherwise prosecute any action relating
    to the Released Claims; provided, however, nothing contained herein shall preclude the
    Pg 8 of 39
    Institutional Investors or their advised clients from seeking any such relief with respect to direct
    claims for securities fraud or other disclosure-related claims arising from the purchase or sale of
    Securities. ResCap reserves its rights and defenses therewith.
    Section 7.04 Inclusion of Accepting Trustees in Plan Exculpation Provisions. The
    Trustees of any Trust accepting the offer to settle described in Section 5.01 and their respective
    counsel shall be entitled to the benefit of any plan exculpation provision, if any, included in the
    Plan, which exculpation shall be no less favorable than the plan exculpation provisions extended
    to similarly situated creditors or parties in interest who are parties to any plan support agreement
    with ResCap.
    Section 7.05 Servicing of the Mortgage Loans. Except as provided in Section 8.01, the
    release and waiver in Article VII includes all claims based in whole or in part on any actions,
    inactions, or practices of the Master Servicer, Servicer, or Subservicer as to the servicing of the
    Mortgage Loans held by the Trusts prior to the Petition Date.
    Section 8.01 Administration of the Mortgage Loans. The releases and waivers in
    Article VII herein do not include claims that first arise after the Effective Date which are based
    in whole or in part on any actions, inactions, or practices of the Master Servicer, Servicer, or
    Subservicer as to the servicing of the Mortgage Loans held by the Trusts in their aggregation and
    remittance of Mortgage Loan Payments, accounting for principal and interest, and preparation of
    tax-related information, in connection with the Mortgage Loans and the ministerial operation and
    administration of the Trusts and the Mortgage Loans held by the Trusts, for which the Master
    Servicer, Servicer, or Subservicer received servicing fees, unless, as of the date hereof, the
    Institutional Investors, have or should have knowledge of the actions, inactions, or practices of
    ResCap in connection with such matters.
    Section 8.02 Financial-Guaranty Provider Rights and Obligations. To the extent that
    any third party guarantor or financial-guaranty provider with respect to any Trust has rights or
    obligations independent of the rights or obligations of the Investors, the Trustees, or the Trusts,
    the releases and waivers in Article VII are not intended to and shall not release such rights.
    Section 8.03 Settlement Agreement Rights. The Parties do not release or waive any
    rights or claims against each other to enforce the terms of this Settlement Agreement or the
    Allowed Claim.
    Section 8.04 Disclosure Claims. The releases and waivers in Article VII do not include
    any claims based on improper disclosures under federal or state securities law.
    Section 8.05 Reservation of Rights. Notwithstanding anything in this Settlement
    Agreement to

  29. 1st American Title has\had been checking credit reports of borrowers.

  30. How about a house fraudclosed by servicer bought by an innocent 3rd party for full amount , still showing balance open in full 3 years later on servicer in house statements/computers. Servicer blames Freddie Mac yet Freddie blames servicer and says they received none of the $200k and servicer is lying. ……crazy stuff, keeps getting crazier !!!!!

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