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Mortgage Lawsuits News | Mortgage Litigation Index
Mortgage industry lawsuit news and mortgage litigation coverage. Stories about legal settlements, judgments and mortgage class actions.


Mortgage Firms Wade Through Corporate Bankruptcies

Recent activity in chapter 11 bankruptcy cases

Feb. 18, 2013

By LISA D. BURDEN Mortgage Daily


Activity continues in the corporate bankruptcy cases of some of the nation's former mortgage players. Several recent rulings involve payments to law firms.

The court granted Ocwen Loan Servicing LLC's motions for partial summary judgment on the trustee's amended complaint and by the trustee on counterclaims asserted by Ocwen on Aug. 30, 2010, in the bankruptcy case of American Business Financial Services Inc.

The court found that there was no evidence of any breach of fiduciary duty or aiding and abetting a breach of fiduciary duty. The trustee, the court said, had presented no additional evidence to support these claims against Ocwen. Therefore, Ocwen's motion for summary judgment with regard to the claims were granted. And, the court added, to the extent that the trustee's claims for an accounting, subordination and declaratory judgment relied on the claims, the court said it would grant summary judgment on those claims as well.

American Business and its subsidiaries originated and serviced mortgage loans primarily to credit-impaired borrowers.

In the bankruptcy of Residential Capital LLC, a notice of presentment of stipulation and order between the debtors and Ocwen resolving Ocwen's reservation of rights with respect to the debtors' proposed stipulation and order relating to the assumption and assignment of certain agreements of Freddie Mac under the bankruptcy code and approving an amendment to the asset purchase agreement was filed on Feb. 14.

Bank of America, N.A., filed a motion on Feb. 5 in Bank Of America, N. A. v. Federal Deposit Insurance Corporation asking for clarification of the court's Dec. 10, 2012, opinion. In ruling on the motion to dismiss the counterclaims filed by the FDIC, the court found certain exculpatory language in the custodial agreement ambiguous, after drawing all inferences in favor of the FDIC. BofA asked the court to clarify that its ruling does not foreclose other interpretations of that exculpatory language at a later date. The FDIC opposed this motion.

In the bankruptcy case of IndyMac Bancorp Inc., an order granting the fee applications of some of the professionals involved in the case was filed on Dec. 20, 2012. J. Beck & Associates Inc., the trustee's advisor, for the period from April 1, 2012, through Oct. 31, 2012, requested payment of fees in the amount of $4,278, and Jenner & Block LLP, the trustee's special insurance counsel, for the period March 1, 2012, through June 30, 2012, requested payment of fees in the amount of $1,468,824 and expense reimbursement in the amount of $163,929. There were no objections.

The court allowed the payments.

IndyMac was once among the largest mortgage lenders in the country, specializing in Alt-A mortgages.

The examination of Robert McDonald in the bankruptcy case of Integrated Financial Associates scheduled for Feb. 12 was vacated without prejudice to be rescheduled at a later date. An order on a motion to quash was filed on Feb. 13. Integrated is a Nevada-based hard money lender. Last summer, it obtained a limited, temporary permit to carry on existing business.

In re. Ocala Funding LLC, a hearing is scheduled for March 6 on the debtor's motion to approve a settlement agreement with Cadawalder, Wichersham and Taft LLP. Cadwalader provided legal services to the debtor's parent, Taylor, Bean & Whitaker Mortgage Corp.

Ocala scheduled a disputed, general unsecured claim in favor of Cadwalader for $1,632,386. Under the agreement, Cadwalader will waive and release the Cadwalader Claim; Cadwalader will pay the Debtor $125,000 cash; Cadwalader will waive any claim that may arise as a result of making the $125,000 cash settlement payment to the debtor; and Ocala and Cadwalader will exchange waivers and releases of all claims and causes of action that exist or may exist between them for work performed by Cadwalader for Ocala prior to the petition date.

A hearing scheduled for Feb. 20 in the bankruptcy case of The PMI Group Inc. has been cancelled "as no matters are going forward." Subsidiary PMI Mortgage Insurance Co. was placed into receivership by the Arizona Department of Insurance in October 2011.

A motion to allow David C. Byan, of Wachtell, Lipton, Rosen & Katz, to withdraw his appearance as counsel for Credit Suisse Securities LLC and Credit Suisse International, was filed in Thornburg Mortgage Inc.'s bankruptcy case on Feb. 14.

In Washington Mutual Inc.'s bankruptcy, WMI liquidating trust's objection to the motion of Edward F. Bach to reinstate a proof of claim and vacate an order disallowing the claim and for attorneys' fees and costs was filed on Feb. 14. The motion seeks the reinstatement of Bach's proof of claim on the basis of, among other things, excusable neglect, and asserts that either WMILT or its counsel should be held liable for the fees and costs that Bach incurred in connection with the motion.



Case Info:

In Re American Business Financial Services, Inc.; George L. Miller, Trustee v. Ocwen Loan Servicing, LLC, Wells Fargo Bank, N.A., Law Debenture Trust Company Of New York.
Case No. 05-10203 (MFW), Jointly Administered, Adv. No. 06-50826 (MFW), Sept. 13, 2006 (U.S. Bankruptcy Court, D. Delaware).

In re Residential Capital LLC.
Case No. 12-12020, May 14, 2012 (U.S. Bankruptcy Court, Southern District of New York).

Bank Of America, N. A. v. Federal Deposit Insurance Corporation.
Civil Action No. 10-CV-1681 (BJR), Oct. 1, 2010 (U.S. District Court, District of Columbia, filed: 10/01/2010

In Re IndyMac.
Case No.: 2:08-21752-BB, July 31, 2008 (U.S. Bankruptcy Court, Central District of California, Los Angeles Division).

In re Integrated Financial Services.
Case No.: BK-S-11-13537-LBR, March 14, 2011 (U.S. Bankruptcy Court for the District of Nevada).

In re Ocala Funding, Llc.
Case No. 3:12-bk-04524-JAF, July 10, 2012 (U.S. Bankruptcy Court for the District of Nevada).

In re The PMI Group Inc..
Case No. 11-13730 (BLS), Nov. 23, 2011 (U.S. Bankruptcy Court for the District Of Delaware).

In re. Thornburg Mortgage Inc.
Case No. 09-17787 (U.S. Bankruptcy Court, District of Maryland, Baltimore).
The lawsuit in the bankruptcy court is Joel Sher v. JP Morgan.
Case No.11-ap- 00340, and the district court case is, 12-cv-00157, filed: May 1, 2009.

In re Washington Mutual Inc.
Case No. 08-12229 (MFW), Sept. 26, 2008 (U.S. Bankruptcy Court District of Delaware).


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Lisa D. Burden has been covering mortgage litigation and mortgage legislation for MortgageDaily.com since 2004 from the Washington, D.C., area. She holds a law degree from the University of Maryland. Lisa is the publisher of Maryland Employment Law Reporter and a freelance journalist who previously wrote for Institutional Investor publications and the Baltimore Daily Record.

e-mail Lisa at: [email protected]


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M e r g e r s, a c q u i s i t i o n s and private and public offerings. Other corporate activity including executive appointments, bankruptcies name changes.


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Failed, closed and a c q u i r e d mortgage-related entities.



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