Preview
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Warren 2006-S4
Rebuttal Report
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SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF NEW YORK
IN RE: PART 60 RMBS PUTBACK LITIGATION
NOMURA ASSET ACCEPTANCE
CORPORATION, ALTERNATIVE LOAN
TRUST SERIES 2006-S4, by HSBC Bank
USA, National Association, in its capacity as
Trustee,
Index No. 653390/2012
Plaintiff, IAS Part 60
-against-
NOMURA CREDIT & CAPITAL, INC.,
Defendant.
NOMURA CREDIT & CAPITAL, INC.,
Third-Party Plaintiff,
-against- Third Party Index No.
595306/2014
WELLS FARGO BANK, N.A. and
OCWEN LOAN SERVICING, LLC,
Third-Party Defendants.
EXPERT REPORT
OF
SAMUEL WARREN
December 2, 2019
HIGHLY CONFIDENTIAL
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TABLE OF CONTENTS
Page
I. INTRODUCTION ...................................................................................................1
II. BACKGROUND .....................................................................................................1
A. Related Litigation by HSBC Against Nomura.............................................1
B. Nomura’s Suit Against Ocwen ....................................................................7
1. Nomura’s Expert Anthony M. Lendez.............................................7
2. Nomura’s Expert Jerry Hausman ...................................................10
C. Scope of Engagement ................................................................................11
III. QUALIFICATIONS AND EXPERIENCE ...........................................................12
IV. RMBS SECURITIZATION BACKGROUND .....................................................15
A. Overview of the Securitization Process .....................................................15
1. Loan Originators Create Loans Securitized in RMBS Trusts ........18
2. Sponsors Perform Diligence to Evaluate Loan Quality and
Purchase Loans for the Purpose of Securitizing Them ..................19
3. The Sponsor Transfers the Loans to the Depositor, Which
Deposits Them Into a Trust in Exchange for Certificates..............22
4. The Certificates Are Sold to Investors ...........................................23
5. The Servicer’s Role........................................................................24
B. PSAs Reflect A Carefully Calibrated Distribution Of Risks
Between And Among The Parties And Certificateholders Related
To The Quality Of The Loans. ...................................................................25
1. Sponsors Assume and Seek to Minimize Repurchase Risk
Related to the Characteristics and Quality of the Mortgage
Loans ..............................................................................................25
2. Servicers Assume Different Risks Unrelated to the Quality
or Performance of the Mortgage Loans .........................................26
3. The Economics of RMBS Reflect the Risk Allocation in
PSAs ...............................................................................................30
4. Sponsors Such as Nomura Could and Did Seek to Mitigate
Their Repurchase Risk by Insisting on Early Payment
Default Protection from Originators, but Nomura Accepted
Payment in Lieu of Invoking this Protection, and Retained
the Risk ..........................................................................................31
V. REBUTTAL OF NOMURA’S DAMAGES EXPERT .........................................33
A. Summary of Dr. Jerry A. Hausman’s Assumptions and Findings .............33
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B. In Calculating Damages, Dr. Hausman Ignores Nomura’s
Admission That Its Damages Claim Against Ocwen Is Contingent
on the Existence of Material Breaches, Which Nomura Has Denied ........35
C. Dr. Hausman’s Calculation of Damages from Ocwen’s Alleged
Failure to Notify of Breaches is Based on Mr. Lendez’s Baseless
Assumption that the Relevant Loans “Had No Equity”.............................37
D. Dr. Hausman’s Calculation of Damages from Ocwen’s Alleged
Failure to Notify of Breaches is Incorrect..................................................38
1. There is No Basis to Conclude That Ocwen Discovered
Any Breaches or That Nomura Would Have Repurchased
Claim Loans Even if Ocwen Had Provided Notice .......................39
i. The 337 Claim Loans for Which Nomura’s Expert
Found No Breaches Should Be Excluded From
Hausman’s Damages Calculation ......................................40
ii. The 30 Loans For Which Nomura’s Expert
Affirmatively Found Insufficient Information To
Establish Breaches Of Representations And
Warranties Should Be Excluded From Damages
That Dr. Hausman Attributes To Ocwen ...........................42
2. The Loans That, According To Mr. Lendez, Defaulted For
Reasons Other Than Alleged Breaches Of Representations
And Warranties Should Be Excluded From Damages That
Dr. Hausman Attributes To Ocwen ...............................................44
3. Dr. Hausman Ignores the Fact Nomura Has Been Notified
of Potential Breaches of Representations and Warranties
and Has Not Repurchased the Loans .............................................46
4. Dr. Hausman Ignores His Own Criticisms of Dr. Snow’s
Methodology, Which When Applied, Materially Reduces
His Damages Calculation ...............................................................49
5. Dr. Hausman Does Not Consider Whether Nomura
Received “Reprice” Payments from Originators ...........................51
E. Dr. Hausman’s Calculation Of Damages Based On Ocwen’s
Alleged Failure To “Make Prudent Servicing Decisions” Is
Unreliable and are Miscalculated...............................................................51
i. Dr. Hausman’s Assertion That High Loss Severities
are the Result of Purported Servicer Misconduct Is
Baseless and Renders the Related Damages
Calculation Unreliable .......................................................55
ii. Neither Mr. Lendez Nor Dr. Hausman
Appropriately Account For The Expectation that
Second Lien Loans Are Expected To Have A Loss
Severity of 100% in A Stressed Housing Market ..............58
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2. Dr. Hausman’s Calculation of Damages Attributable to
Ocwen’s Alleged Misconduct Related to Loans with Loss
Severities in Excess of 100% Is Unreliable and Overstated ..........58
i. Dr. Hausman’s Methodology for Calculating
Damages for Purported Misconduct Related to
Loans with Loss Severities in Excess of 100%
Overstates Nomura’s Hypothetical Damages
Because It Is Based on a Faulty Calculation ......................59
VI. CONCLUSION ......................................................................................................63
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I. Introduction
1. My name is Samuel Warren. I am the head of the Advisory Group within
Brean Strategic Advisors LLC (“Brean”). My qualifications are detailed in Section III, and
my Curriculum Vitae is included as Appendix A of this Report.
2. I have been retained by Chelney Law Group PLLC and Locke Lord LLP to
provide expert opinions on behalf of Ocwen Loan Servicing, LLC (“Ocwen”), a defendant
in Nomura Credit & Capital Inc. v. Wells Fargo Bank, N.A., and Ocwen Loan Servicing,
LLC, (NY Sup. Ct., New York Cty., Third-Party Index No. 595306/2014).
II. Background
A. Related Litigation by HSBC Against Nomura
3. I understand that in a related case, HSBC Bank USA, National Association
(“HSBC”), as Trustee of the Nomura Asset Acceptance Corporation Alternative Loan
Trust, Series 2006-S4 (the “Trust” or the “NAAC 2006-S4 Trust” or the “NAAC 2006-S4
Securitization”), has brought a suit against Nomura Credit & Capital, Inc. (“Nomura”), as
securitization sponsor1, alleging that Nomura breached its representations and warranties
related to certain of the loans securitized in the Trust (the “First Party Action”).
4. In the First Party Action, HSBC demands that Nomura repurchase certain
mortgage loans in accordance with the repurchase protocol described in Section 2.03 of the
Pooling and Servicing Agreement (the “PSA” or the “NAAC 2006-S4 PSA”), dated
September 1, 2006, between Nomura Asset Acceptance Corporation, as depositor, Nomura
Credit & Capital, Inc., as seller, GMAC Mortgage Corporation and Ocwen Loan Servicing,
1
I note that the NAAC 2006-S4 PSA designated Nomura as the seller, which in the context of non-agency
RMBS securitizations carries the same meaning as securitization sponsor. See Case No. 653390/2012, Dkt.
8. Therefore, for the purposes of this report, I refer to Nomura as the sponsor.
1
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LLC (“Ocwen”), as servicers, HSBC Bank USA, National Association, as trustee, and
Wells Fargo Bank, N.A., as Securities Administrator, Master Servicer and Custodian.
5. I also understand that HSBC engaged Robert W. Hunter to perform a “re-
underwriting review” of a sample of 400 loans (the “Sample Loans”) underlying NAAC
2006-S4 Securitization, 2 and in reviewing the Sample Loans, Mr. Hunter purportedly
“determined whether one or more violations of Representations were present, and, as to
each such violation, whether the violation was material.”3 Mr. Hunter found that “367 of
the 400 Sample Loans in the NAAC 2006-S4 did not comply with the Representations in
the MPLA in a manner that, as of the date of breach and continuously thereafter, has
materially and adversely affected the value of any Mortgage Loan….”4
6. Mr. Hunter apparently found no material representation and warranty
(“R&W”) breaches in the remaining 33 Sample Loans.
7. I understand that HSBC also engaged Peter D. Rubinstein “to opine on the
meaning of the Rating Agency Warranty, what breaches of the Rating Agency Warranty
have a material and adverse effect, and identify whether any breaches of the Rating Agency
Warranty have a material and adverse effect.”5 Dr. Rubinstein found in total that “283
2
Amended Expert Report of Robert W. Hunter, Nomura Asset Acceptance Corporation Alternative Loan
Trust, Series 2006-S4, by HSBC Bank USA, National Association, in its capacity as Trustee v. Nomura
Credit & Capital, Inc. (Sup. Ct. N.Y. Co., No. 653390/2012) (December 6, 2018) (the “Amended Hunter
Report”), pp. 2-3.
3
Amended Hunter Report, p. 76.
4
Id. at p. 78.
5
Amended Expert Report of Peter D. Rubinstein, Nomura Asset Acceptance Corporation Alternative Loan
Trust, Series 2006-S4, by HSBC Bank USA, National Association, in its capacity as Trustee v. Nomura
Credit & Capital, Inc. (Sup. Ct. N.Y. Co., No. 653390/2012) (December 6, 2018) (the “Amended
Rubinstein Report”), pp. 1-2.
2
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loans had breaches with a material and adverse effect in one or more of the loan
characteristics….”6
8. Dr. Rubinstein apparently found no material representation and warranty
breaches in the remaining 117 Sample Loans.
9. I understand that HSBC also engaged Karl N. Snow to “draw a random
sample from the population of Mortgage Loans underlying the Trust that had been charged
off in full for accounting purposes with a loss of greater than or equal to $100 and that had
not been repurchased as of January 31, 2016….”7 Dr. Snow refers to these 2,347 loans8 as
the “Liquidated Loans” and the “Liquidated Population.”9 For the purposes of this report,
I refer to these 2,347 loans as the “Liquidated Loan Population.” Dr. Snow’s “Primary
Sample” included 40010 “Liquidated Loans.” Dr. Snow received a “Defective Liquidated
Loan List,” which includes the 377 allegedly “Defective Liquidated Loans” based on Mr.
Hunter’s and Dr. Rubinstein’s findings.11 For the purposes of this report, I refer to these
377 loans as the “Claim Loans.” Based on the rate of “Defective Liquidated Loans” in the
sample (377/400 = 94.25%), Dr. Snow extrapolates to the rest of the 2,347 “Liquidated
Loans.” Dr. Snow refers to the resulting 2,212 derived loan population as the “Extrapolated
Defective Liquidated Loans in Population.”12
6
Amended Rubinstein Report, p. 52.
7
Amended Expert Report of Karl N. Snow, Nomura Asset Acceptance Corporation Alternative Loan Trust,
Series 2006-S4, by HSBC Bank USA, National Association, in its capacity as Trustee v. Nomura Credit &
Capital, Inc. (Sup. Ct. N.Y. Co., No. 653390/2012) (December 6, 2018) (the “Amended Snow Report”), p.
5.
8
Amended Snow Report, p. 6.
9
Id. at p. 5.
10
Id. at p. 19.
11
Id. at p. 6.
12
Id.
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10. Dr. Snow calculated “Repurchase Damages” for all 2,347 “Liquidated
Loans” under five 13 scenarios, involving different assumptions about the date Nomura
would have hypothetically repurchased the loans. 14 Dr. Snow calculated damages of
$270.7 million to $274.2 million due to “Nomura’s failure to repurchase the Defective
Liquidated Loans,” depending on the scenario.15
11. It is also my understanding that Nomura denied that it breached its
representations and warranties as alleged by HSBC and has challenged the damages
calculated by HSBC’s expert, Dr. Snow.
12. Nomura engaged Michael Forester who “evaluated the 367 Hunter Claim
Loans for the presence of alleged material breaches of the Representations, as claimed by
Hunter….”16 In conducting his review, Mr. Forester relied on his “extensive experience
and knowledge of underwriting, re-underwriting and the mortgage industry….”17
13. After reviewing the 367 loans, Mr. Forester found “Hunter’s opinions as to
the existence and/or materiality of claimed breaches of Representations as to 337 of those
loans are unfounded and/or lack adequate support.”18 Mr. Forester also found that “[f]or
30 of the Hunter Claim Loans, I am not able to reach a definitive opinion based on the
currently available information.”19 Mr. Forester also notes that “Hunter improperly bases
13
See id. at pp. 6-8.
14
Id. at p. 6.
15
Id. at p. 8.
16
Expert Report of Michael Forester, Nomura Asset Acceptance Corporation Alternative Loan Trust,
Series 2006-S4, by HSBC Bank USA, National Association, in its capacity as Trustee v. Nomura Credit &
Capital, Inc. (Sup. Ct. N.Y. Co., No. 653390/2012) (June 26, 2019) (the “Forester Report”), p. 4.
17
Forester Report, p. 4.
18
Id. at p. 6.
19
Id.
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various allegations on breach on purported violations of underwriting guidelines, even
though there is no underwriting guidelines representation in the MLPA.”20
14. Nomura also engaged Jerry A. Hausman to among other things, “provide
[his] opinions in response to allegations of ‘materiality’ and amounts recoverable contained
in the Amended Expert Report of Robert W. Hunter … the Amended Confidential Expert
Report of Peter D. Rubinstein, Ph.D . . . and the Amended Expert Report of Karl N. Snow,
Ph.D., as well as to opine on whether these reports demonstrate that the alleged breaches
of representations and warranties caused losses with respect to the mortgage loans at
issue.”21
15. Dr. Hausman noted that “[i]n the years before the NAAC 2006-S4
securitization closed in September 2006, the United States housing market experienced an
unprecedented increase in housing prices, followed shortly thereafter by the worst financial
crisis since the Great Depression.”22 Dr. Hausman further stated: “the subsequent collapse
in housing prices and rise in unemployment led to a substantial increase in the seriously
delinquency rate at the national level, as well as increasing losses to the owners of the
mortgage loans. All of these changes were generally even more pronounced in the regions
where loans in the Trust were concentrated.”23 In the same vein, Dr. Hausman also stated
that “[e]conomic theory and experience indicate that housing prices have a significant
20
Id. at p. 7.
21
Expert Report of Jerry A. Hausman, Nomura Asset Acceptance Corporation Alternative Loan Trust,
Series 2006-S4, by HSBC Bank USA, National Association, in its capacity as Trustee v. Nomura Credit &
Capital, Inc. (Sup. Ct. N.Y. Co., No. 653390/2012) (June 26, 2019) (the “Hausman First-Party Report”),
pp. 2-3.
22
Hausman First-Party Report, p. 31.
23
Id. at 32.
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effect on the likelihood of borrower default as well as the amount of loss in the event of
foreclosure.”24
16. With respect to the “Mr. Hunter and Dr. Rubinstein [contention] generally
that certain ‘defects’ associated with underwriting and origination of the at-issue loans (as
alleged by Mr. Hunter) are ‘material,’” Dr. Hausman found that “neither Mr. Hunter nor
Dr. Rubinstein conducts any empirical analysis linking the specific alleged defects that
they identify to the performance of the at-issue loans” and “[i]n the absence of such an
analysis, their opinions that certain alleged breaches were ‘material and adverse’ are
unsupported.”25 Dr. Hausman further stated, “Dr. Rubinstein gives no consideration to
differences in the performance of the loans in the Trust and the different time periods,
geographies, and loan characteristics.”26
17. Dr. Hausman also found: “None of the Plaintiff’s experts demonstrate that
any losses were caused by the alleged defects in the Claim Loans. Plaintiff’s expert reports
contain no empirical analyses to assess whether those alleged defects, as opposed to other
factors, caused any losses wither at the individual loan level or to the certificates. To the
contrary, as discussed above, factors other than alleged defects caused a substantial amount
of the losses on the mortgage loans underlying the Trust.”27 Of note, Dr. Hausman does
not reference servicer conduct among factors which cause losses on the mortgage loans.
24
Id.
25
Id. at pp. 47-48.
26
Id. at p. 49.
27
Id. at p. 50.
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B. Nomura’s Suit Against Ocwen
18. I understand that Nomura subsequently sued Ocwen, the servicer for the
loans in the NAAC 2006-S4 Securitization (the “Third Party Action”).28 Nomura alleges
that Ocwen failed to perform its obligations under the NAAC 2006-S4 PSA and that
Nomura suffered damages from Ocwen’s conduct.29
1. Nomura’s Expert Anthony M. Lendez
19. In Nomura’s suit against Ocwen, Nomura engaged Anthony M. Lendez to
opine on “(i) whether borrower defaults on certain mortgage loans were causally related to
breaches of origination-related representations and warranties; and (ii) whether Ocwen …
complied with … servicing obligations.”30
20. Mr. Lendez noted that the Offering Circular for the NAAC 2006-S4
Securitization stated “an overall general decline in residential real estate values could cause
a particularly severe decline in the value of the mortgaged properties relating to mortgage
loans in the trust.”31 Mr. Lendez further noted, “[a]s of the Measurement Date, cumulative
Realized Losses for the 2,347 Liquidated Loan Population total $136,107,327 with over
76% of the Realized Losses occurring in California, Virginia, Florida, Nevada, Maryland,
New York and Arizona…” and “between 2007 and 2009, these seven states sustained
substantial decreases in property values.”32
28
Nomura Credit & Capital, Inc., v. Wells Fargo Bank, N.A. and Ocwen Loan Servicing, LLC (Sup. Ct.
N.Y. Co., Third Party Index No. 595306/2014).
29
Id. at ¶¶ 43-67.
30
Amended Expert Report of Anthony M. Lendez, Nomura Credit & Capital, Inc., v. Wells Fargo Bank,
N.A. and Ocwen Loan Servicing, LLC (Sup. Ct. N.Y. Co., Third Party Index No. 595306/2014) (May 31,
2019) (the “Amended Lendez Report”), p. 1.
31
Amended Lendez Report, p. 11.
32
Id. at 14-15.
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21. Mr. Lendez also opined that it is “highly unlikely that a delinquency or
default was the result of an origination deficiency the longer a loan performs.”33 Relying
upon the Representations & Warranties Framework used by the GSEs, “which suggests
that they will not pursue origination-based claims once a loan has performed for a specified
period of time,”34 Mr. Lendez “eliminates the losses” associated with 84 Claim Loans and
550 loans in the Liquidated Loan Population that fit the GSE’s criteria.35
22. Mr. Lendez also concluded that for the 140 Claim Loans and 859 of the
loans in the Liquidated Loan Population, where the delinquencies and defaults were
traceable to a “change of life event” suffered by the borrower, the defaults of the loans
were likely caused by those events and not by any breach of Nomura’s representations and
warranties.36
23. Mr. Lendez then concluded that Ocwen “failed to make prudent servicing
decisions, often leading to unnecessary losses and avoidable expenses…”37 on 262 of the
377 Claim Loans and 1,615 of the 2,347 loans in the Liquidated Loan Population.38 In
support of this claim, Mr. Lendez states that “if the servicer makes a prudent servicing
decision with respect to any particular mortgage loan, the trust should never incur a loss
greater than 100% of that mortgage loan.” 39 Mr. Lendez cites Ocwen’s policies and
33
Id. at p. 26.
34
Id. at p. 26. According to Mr. Lendez, “the GSE Framework will not seek to enforce origination-based
claims upon payment by the borrower of the first 36 monthly payments due following the mortgage loan
acquisition date, provided the borrower: (i) had no more than two 30-day delinquencies; (ii) had no 60-day
or greater delinquencies; and (iii) is not 30 or more days delinquent with respect to the 36th monthly
payment.” See i.d. at pp. 25-26 n.50 (citing “Lender Selling Representations and Warranties Framework
Updates.” Selling Guide Announcement SEL-2014-05, Fannie Mae, May 12, 2014).
35
Id. at p. 26.
36
Id. at pp. 26-27.
37
Id. at p. 35.
38
Id. at pp. 35, 38-39.
39
Id. at p. 37.
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procedures as outlined in the Offering Circular (also known as the prospectus supplement)
for the NAAC 2006-S4 Securitization, which stated:
If the projected loss severity reaches or exceeds 100%
(proceeds less expenses) then future advances on the
mortgage loan are deemed non-recoverable and a
recommendation is then made to stop making such advances.
A more in-depth analysis is conducted to determine if
charge-off is appropriate.40
24. Mr. Lendez also concluded that Ocwen “failed to provide prompt written
notice” of Nomura’s breaches of “origination-related representations and warranties that
materially and adversely affect[ed] the interest of the Certificateholders” on 367 of the 377
Claim Loans and 2,259 of the 2,347 loans in the Liquidated Loan Population.41 Mr. Lendez
does not opine that Ocwen knew that Nomura breached its representations and warranties
with respect to any particular loan, nor does he identify any information in Ocwen’s
possession showing that Ocwen had discovered that Nomura breached its representations
and warranties. Mr. Lendez does not articulate any basis to conclude that the terms of the
PSA expressly require, or that, as a matter of Accepted Servicing Practices (as that term is
defined in the PSA), servicers are expected to review delinquent or defaulted loans to
determine if a sponsor, such as Nomura, materially breached its representations and
warranties. Instead, Mr. Lendez claims that “[w]hen a loan defaults, a reasonable and
prudent servicer, acting in accordance with industry custom and practice, should promptly
weigh its recovery and loss mitigation options…” and “[o]ne of those options involves
investigating and providing notice of potential representation and warranty breaches and
40
NAAC 2006-S4 Offering Circular (September 28, 2006), p. 51. See Index No. 653390/2012, Dkt. No.
10.
41
See Amended Lendez Report, pp. 40-41.
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repurchase claims.”42 Mr. Lendez does not provide any basis for his opinion and based on
my experience negotiating and administering PSAs, servicers are not compensated for or
expected to investigate potential sponsor breaches of the sponsor’s representations and
warranties. My view is corroborated by Ms. Harris and Mr. Lauria who opined servicers
do not evaluate whether sponsors materially breached the sponsor’s representations and
warranties when considering and performing available loss mitigation options, or
otherwise.
25. Nevertheless, Mr. Lendez opines that Ocwen should have provided notice
of Nomura’s alleged breaches of representations and warranties to Nomura, upon the
earlier of when a borrower became 90 days delinquent or entered foreclosure, plus 30
days. 43 According to Mr. Lendez, “[h]ad the Servicers undertaken a review of the
origination-related materials shortly after delinquency in their efforts to determine the best
course for maximizing recoveries, there is no reason that they too would not have identified
the breaches” alleged by the Trust.44
2. Nomura’s Expert Jerry Hausman
26. In its suit against Ocwen, Nomura also engaged Jerry A. Hausman to
“determine the amount of damages calculated by Dr. Snow… for loans where Nomura’s
Expert Anthony M. Lendez … has opined in his April 26, 2019 expert report that Nomura’s
alleged breaches are highly unlikely to have caused default” and “result from certain
servicing practices identified by Mr. Lendez.”45 Based on Mr. Lendez’s conclusions, Dr.
42
Id. at p. 40.
43
See id. at p. 40. As a shorthand throughout this report, I refer to such breaches as “material” breaches.
44
See id.
45
Expert Report of Jerry A. Hausman Report, Nomura Credit & Capital, Inc., v. Wells Fargo Bank, N.A.
and Ocwen Loan Servicing, LLC (Sup. Ct. N.Y. Co., Third Party Index No. 595306/2014) (April 26, 2019)
(the “Hausman Report”), p. 3.
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Hausman recalculated the Trust’s damages using Dr. Snow’s methodology, but reduced
damages and attributed a portion of those damages to Ocwen46 based on “certain servicing
practices identified by Mr. Lendez.”47 Dr. Hausman relied upon Mr. Lendez’s allegation
of Ocwen’s “(i) failure to make sound decisions on defaulted mortgage loans; and
(ii) failure to provide prompt notice.”48
27. Based on Mr. Lendez’s opinions, Dr. Hausman also reduced damages that
Nomura allegedly caused to the NAAC 2006-S4 Trust, by excluding from his calculations
loans that went delinquent or defaulted after a significant number of payments were made
and loans which likely went delinquent or defaulted due to a “change of life event” suffered
by the borrower.49
C. Scope of Engagement
28. I have been retained to provide an overview of the securitization process for
RMBS securitizations and the roles, responsibilities, and expectations of parties to RMBS
securitizations and evaluate Dr. Hausman’s calculation of damages he attributed to Ocwen
based on Mr. Lendez’s findings.
29. In connection with this engagement, I have reviewed and analyzed the fact
discovery materials provided to me. I also have reviewed and analyzed publicly available
information and data pertaining to RMBS. A list of the documents and data I relied upon
in forming my expert opinions is listed in Appendix B.
46
See Hausman Report, p. 8.
47
Id. at p. 3. I note that although Dr. Hausman relies on the Lendez report dated, April 26, 2019, the figures
Dr. Hausman relies upon are consistent between Mr. Lendez’s April 26, 2019 and May 31, 2019 reports.
48
See id. at p. 8.
49
See id. at pp. 6-7.
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30. The aforementioned background, evaluation, and review of relevant
materials, are informed by my experience purchasing, valuing, and modelling the
performance of mortgage loans collateralizing RMBS, structuring and modelling RMBS,
and negotiation, sale, and oversight of sub-servicing contracts.
31. All of the opinions in this report are my own. I am being compensated for
my work on this matter at my regular hourly rate of $750. I have been assisted in this
matter by staff of Brean, who work under my direction.
32. My compensation for this report is not contingent upon the substance of my
opinions, the substance of any testimony I provide related to this report, or the outcome of
this Action or any proceeding within this Action. I reserve the right to amend and/or
supplement this report, to address, among other things, any supplemental interrogatory
responses, the report(s) of Plaintiff’s damages and other expert witnesses, and any facts
learned after this report is served.
III. Qualifications and Experience
33. I am the head of the Strategic Advisory Group within Brean. In my career
I have developed expertise on mortgage loans, mortgage backed securities and mortgage
serving rights. I have spent the past decade advising the world’s largest banks and
insurance companies on issues relating to the financi