Comments on: Countrywide Class Action: What’s a Good Sale? http://www.ritholtz.com/blog/2008/12/countrywide-class-action-whats-a-good-sale/ Macro Perspective on the Capital Markets, Economy, Geopolitics, Technology, and Digital Media Tue, 14 Feb 2012 23:28:32 +0000 hourly 1 http://wordpress.org/?v=3.0.5 By: Chris Whalen http://www.ritholtz.com/blog/2008/12/countrywide-class-action-whats-a-good-sale/comment-page-1/#comment-131320 Chris Whalen Sun, 07 Dec 2008 12:31:07 +0000 http://www.ritholtz.com/blog/?p=12071#comment-131320 Good question. I will CK. My question too is that upon close of the CFC acquisition, BAC "purchased" the servicing business out of CFC in consideration for a note. Was documented in the last 8-K posted by CFC, I believe. Thus I thought BAC should be an explicit party. Cannot leave a servicer in a vehicle that might file because it losses its tax pass through status in bankruptcy, thus BAC moved same to another vehicle upon close, but left CFC and the subsidiary bank otherwise as is. The whole issue of the role of the servicer is fascinating and has big implications for the market. If this litigation provokes a ruling on the nature of a sale between a sponsor and a securitization trust, the markets for this paper will turn into a free-for-all of litigation. The defacto issuers, namely the banks who control the securitization trusts, will be wards of the state or bankrupt if they must repurchase all of this paper, as this suit seeks. Good question. I will CK.

My question too is that upon close of the CFC acquisition, BAC “purchased” the servicing business out of CFC in consideration for a note. Was documented in the last 8-K posted by CFC, I believe. Thus I thought BAC should be an explicit party. Cannot leave a servicer in a vehicle that might file because it losses its tax pass through status in bankruptcy, thus BAC moved same to another vehicle upon close, but left CFC and the subsidiary bank otherwise as is.

The whole issue of the role of the servicer is fascinating and has big implications for the market. If this litigation provokes a ruling on the nature of a sale between a sponsor and a securitization trust, the markets for this paper will turn into a free-for-all of litigation. The defacto issuers, namely the banks who control the securitization trusts, will be wards of the state or bankrupt if they must repurchase all of this paper, as this suit seeks.

]]> By: David Merkel http://www.ritholtz.com/blog/2008/12/countrywide-class-action-whats-a-good-sale/comment-page-1/#comment-131315 David Merkel Sun, 07 Dec 2008 07:08:52 +0000 http://www.ritholtz.com/blog/?p=12071#comment-131315 CFC has not behaved as a disinterested party here. They have used their control over the servicer for their own ends to the detriment of bondholders. That said, whoever controls the juniormost class typically controls the servicer. Does CFC control the juniormost class of securities? CFC has not behaved as a disinterested party here. They have used their control over the servicer for their own ends to the detriment of bondholders. That said, whoever controls the juniormost class typically controls the servicer. Does CFC control the juniormost class of securities?

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