FINAL Trustee Action - Complaint Against U S Bank N A

SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF NEW YORK

BLACKROCK ALLOCATION TARGET
SHARES: SERIES S PORTFOLIO;
BLACKROCK BALANCED CAPITAL
PORTFOLIO (FI); BLACKROCK CORE
ACTIVE BOND FUND B; BLACKROCK
CORE ACTIVE LIBOR FUND B;
BLACKROCK CORE BOND
PORTFOLIO; BLACKROCK CORE
BOND TRUST; BLACKROCK
COREALPHA BOND FUND E;
BLACKROCK COREALPHA BOND
MASTER PORTFOLIO; BLACKROCK
COREPLUS BOND FUND B;
BLACKROCK ENHANCED
GOVERNMENT FUND, INC.;
BLACKROCK FIXED INCOME
GLOBALALPHA MASTER FUND LTD.;
BLACKROCK FIXED INCOME VALUE
OPPORTUNITIES; BLACKROCK
FUNDS II, INFLATION PROTECTED
BOND PORTFOLIO; BLACKROCK
INCOME OPPORTUNITY TRUST;
BLACKROCK INCOME TRUST, INC.;
BLACKROCK LIMITED DURATION
INCOME TRUST; BLACKROCK LOW
DURATION BOND PORTFOLIO;
BLACKROCK MANAGED
VOLATILITY V.I. FUND (FI);
BLACKROCK MULTI-ASSET INCOME
NON-AGENCY MBS PORTFOLIO;
BLACKROCK MULTI-SECTOR
INCOME TRUST; BLACKROCK
SECURED CREDIT PORTFOLIO;
BLACKROCK STRATEGIC INCOME
OPPORTUNITIES PORTFOLIO;
BLACKROCK TOTAL RETURN
PORTFOLIO (INS SERIES);
BLACKROCK TOTAL RETURN V.I.
PORTFOLIO (INS - VAR SER);
BLACKROCK US MORTGAGE;
Index No. click here

DERIVATIVE COMPLAINT
AGAINST U.S. BANK NATIONAL
ASSOCIATION FOR BREACH OF
CONTRACT; VIOLATION OF THE
TRUST INDENTURE ACT OF 1939;
BREACH OF FIDUCIARY DUTY;
BREACH OF DUTY OF
INDEPENDENCE; AND
NEGLIGENCE

BLACKROCK WORLD INCOME FUND,
INC.; FIXED INCOME SHARES (SERIES
R); FIXED INCOME SHARES: SERIES
C; FIXED INCOME SHARES: SERIES
LD; FIXED INCOME SHARES: SERIES
M; LVS I LLC; LVS I SPE XIV LLC; LVS
II LLC; PARS ASPIRE FUND; PCM
FUND, INC.; PIMCO ABSOLUTE
RETURN STRATEGY 3D OFFSHORE
FUND LTD.; PIMCO ABSOLUTE
RETURN STRATEGY II MASTER FUND
LDC; PIMCO ABSOLUTE RETURN
STRATEGY III MASTER FUND LDC;
PIMCO ABSOLUTE RETURN
STRATEGY III OVERLAY MASTER
FUND LTD.; PIMCO ABSOLUTE
RETURN STRATEGY IV IDF LLC;
STRATEGY IV MASTER FUND LDC;
STRATEGY V MASTER FUND LDC;
PIMCO CANADA CANADIAN
COREPLUS BOND TRUST; PIMCO
CANADA CANADIAN COREPLUS
LONG BOND TRUST; PIMCO CANADA
CANADIAN TACTICAL BOND TRUST;
PIMCO CANADIAN TOTAL RETURN
BOND FUND; PIMCO COMBINED
ALPHA STRATEGIES MASTER FUND
LDC; PIMCO CORPORATE & INCOME
OPPORTUNITY FUND; PIMCO
CORPORATE & INCOME STRATEGY
FUND; PIMCO DISTRESSED SENIOR
CREDIT OPPORTUNITIES FUND II,
L.P.; PIMCO DYNAMIC CREDIT
INCOME FUND; PIMCO DYNAMIC
INCOME FUND; PIMCO EQUITY
SERIES: PIMCO BALANCED INCOME
FUND; PIMCO ETF TRUST: PIMCO
LOW DURATION EXCHANGE-
TRADED FUND; PIMCO ETF TRUST:
PIMCO TOTAL RETURN EXCHANGE-
TRADED FUND; PIMCO FUNDS:
PIMCO EM FUNDAMENTAL
INDEXPLUS AR STRATEGY FUND;
PIMCO FUNDS: PIMCO

INTERNATIONAL FUNDAMENTAL
PIMCO FUNDS: PIMCO SMALL
COMPANY FUNDAMENTAL
PIMCO FUNDS: PIMCO
COMMODITIESPLUS STRATEGY
FUND; PIMCO FUNDS: PIMCO
COMMODITY REAL RETURN
STRATEGY FUND; PIMCO FUNDS:
PIMCO CREDIT ABSOLUTE RETURN
DIVERSIFIED INCOME FUND; PIMCO
FUNDS: PIMCO EMERGING LOCAL
BOND FUND; PIMCO FUNDS: PIMCO
EMERGING MARKETS BOND FUND;
PIMCO FUNDS: PIMCO EMERGING
MARKETS CURRENCY FUND; PIMCO
FUNDS: PIMCO EMG INTL LOW
VOLATILITY RAFI-PLUS AR FUND;
PIMCO FUNDS: PIMCO EXTENDED
DURATION FUND; PIMCO FUNDS:
PIMCO FLOATING INCOME FUND;
PIMCO FUNDS: PIMCO FOREIGN
BOND FUND (U.S. DOLLAR-HEDGED);
PIMCO FUNDS: PIMCO FOREIGN
BOND FUND (UNHEDGED); PIMCO
FUNDS: PIMCO FUNDAMENTAL
ADVANTAGE ABSOLUTE RETURN
PIMCO FUNDAMENTAL INDEXPLUS
AR FUND; PIMCO FUNDS: PIMCO
GLOBAL ADVANTAGE STRATEGY
GLOBAL BOND FUND (U.S. DOLLAR-
HEDGED); PIMCO FUNDS: PIMCO
GLOBAL BOND FUND (UNHEDGED);
PIMCO FUNDS: PIMCO GLOBAL
MULTI-ASSET FUND; PIMCO FUNDS:
PIMCO GNMA FUND; PIMCO FUNDS:
PIMCO HIGH YIELD FUND; PIMCO
FUNDS: PIMCO INCOME FUND;
PIMCO FUNDS: PIMCO INFLATION
RESPONSE MULTI-ASSET FUND;
PIMCO FUNDS: PIMCO
INTERNATIONAL STOCKSPLUS AR

STRATEGY FUND (U.S. DOLLAR-
HEDGED); PIMCO FUNDS: PIMCO
INTERNATIONAL STOCKSPLUS AR
STRATEGY FUND (UNHEDGED);
PIMCO FUNDS: PIMCO INVESTMENT
GRADE CORPORATE BOND FUND;
PIMCO FUNDS: PIMCO LONG
DURATION TOTAL RETURN FUND;
PIMCO FUNDS: PIMCO LONG-TERM
CREDIT FUND; PIMCO FUNDS: PIMCO
LONG-TERM U.S. GOVERNMENT
FUND; PIMCO FUNDS: PIMCO LOW
PIMCO LOW DURATION FUND II;
PIMCO FUNDS: PIMCO LOW
DURATION FUND III; PIMCO FUNDS:
PIMCO MODERATE DURATION
MORTGAGE OPPORTUNITIES FUND;
PIMCO FUNDS: PIMCO MORTGAGE-
BACKED SECURITIES FUND; PIMCO
FUNDS: PIMCO REAL ESTATE REAL
RETURN STRATEGY FUND; PIMCO
FUNDS: PIMCO REAL RETURN ASSET
FUND; PIMCO FUNDS: PIMCO REAL
RETURN FUND; PIMCO FUNDS:
PIMCO SHORT-TERM FUND; PIMCO
FUNDS: PIMCO SMALL CAP
STOCKSPLUS AR STRATEGY FUND;
PIMCO FUNDS: PIMCO
STOCKSPLUS ABSOLUTE RETURN
STOCKSPLUS AR SHORT
PIMCO STOCKSPLUS FUND; PIMCO
FUNDS: PIMCO STOCKSPLUS LONG
PIMCO TOTAL RETURN FUND; PIMCO
FUNDS: PIMCO TOTAL RETURN
FUND II; PIMCO FUNDS: PIMCO
TOTAL RETURN FUND III; PIMCO
FUNDS: PIMCO TOTAL RETURN
FUND IV; PIMCO FUNDS: PIMCO
UNCONSTRAINED BOND FUND;
PIMCO FUNDS: PIMCO
UNCONSTRAINED TAX MANAGED

WORLDWIDE FUNDAMENTAL
ADVANTAGE AR STRATEGY FUND;
PIMCO FUNDS: PRIVATE ACCOUNT
PORTFOLIO SERIES ASSET-BACKED
SECURITIES PORTFOLIO; PIMCO
FUNDS: PRIVATE ACCOUNT
PORTFOLIO SERIES DEVELOPING
LOCAL MARKETS PORTFOLIO;
PORTFOLIO SERIES EMERGING
MARKETS PORTFOLIO; PIMCO
PORTFOLIO SERIES HIGH YIELD
PORTFOLIO; PIMCO FUNDS: PRIVATE
ACCOUNT PORTFOLIO SERIES
INTERNATIONAL PORTFOLIO; PIMCO
PORTFOLIO SERIES LONG DURATION
CORPORATE BOND PORTFOLIO;
PORTFOLIO SERIES MORTGAGE
PORTFOLIO; PIMCO FUNDS: PRIVATE
ACCOUNT PORTFOLIO SERIES REAL
RETURN PORTFOLIO; PIMCO FUNDS:
PRIVATE ACCOUNT PORTFOLIO
SERIES SHORT-TERM PORTFOLIO;
PORTFOLIO SERIES U.S.
GOVERNMENT SECTOR PORTFOLIO;
PIMCO GLOBAL ADVANTAGE
STRATEGY BOND FUND (CANADA);
PIMCO GLOBAL CREDIT
OPPORTUNITY MASTER FUND LDC;
PIMCO GLOBAL INCOME
OPPORTUNITIES FUND; PIMCO
GLOBAL STOCKSPLUS & INCOME
FUND; PIMCO HIGH INCOME FUND;
PIMCO INCOME OPPORTUNITY
FUND; PIMCO INCOME STRATEGY
FUND; PIMCO INCOME STRATEGY
FUND II; PIMCO LARGE CAP
STOCKSPLUS ABSOLUTE RETURN
FUND; PIMCO MONTHLY INCOME
FUND (CANADA); PIMCO OFFSHORE
FUNDS - PIMCO ABSOLUTE RETURN

STRATEGY IV EFUND; PIMCO
OFFSHORE FUNDS: PIMCO
OFFSHORE FUNDS - PIMCO
ABSOLUTE RETURN STRATEGY V
ALPHA FUND; PIMCO STRATEGIC
GLOBAL GOVERNMENT FUND, INC.;
PIMCO TACTICAL OPPORTUNITIES
MASTER FUND LTD.; PIMCO
VARIABLE INSURANCE TRUST:
PIMCO COMMODITYREALRETURN
STRATEGY PORTFOLIO; PIMCO
PIMCO EMERGING MARKETS BOND
PORTFOLIO; PIMCO VARIABLE
INSURANCE TRUST: PIMCO FOREIGN
BOND PORTFOLIO (U.S. DOLLAR
HEDGED); PIMCO VARIABLE
INSURANCE TRUST: PIMCO FOREIGN
BOND PORTFOLIO (UNHEDGED);
PIMCO VARIABLE INSURANCE
TRUST: PIMCO GLOBAL
ADVANTAGE STRATEGY BOND
INSURANCE TRUST: PIMCO GLOBAL
BOND PORTFOLIO (UNHEDGED);
TRUST: PIMCO HIGH YIELD
INSURANCE TRUST: PIMCO LONG
TERM U.S. GOVERNMENT
INSURANCE TRUST: PIMCO LOW
DURATION PORTFOLIO; PIMCO
PIMCO REAL RETURN PORTFOLIO;
TRUST: PIMCO SHORT-TERM
INSURANCE TRUST: PIMCO TOTAL
RETURN PORTFOLIO; PIMCO
PIMCO UNCONSTRAINED BOND
INSURANCE TRUST: PIMCO GLOBAL
MULTI-ASSET MANAGED
ALLOCATION PORTFOLIO; PIMCO

PIMCO GLOBAL MULTI-ASSET
MANAGED VOLATILITY PORTFOLIO;
TERLINGUA FUND 2, LP; CREF BOND
MARKET ACCOUNT; CREF SOCIAL
CHOICE ACCOUNT; TIAA GLOBAL
PUBLIC INVESTMENTS, MBS LLC;
TIAA-CREF BOND FUND; TIAA-CREF
BOND PLUS FUND; TIAA-CREF LIFE
BOND FUND; TIAA-CREF LIFE
INSURANCE COMPANY; TIAA-CREF
SHORT-TERM BOND FUND; TIAA-
CREF SOCIAL CHOICE BOND FUND;
PRUDENTIAL BANK & TRUST;
PRUDENTIAL RETIREMENT
INSURANCE AND ANNUITY
COMPANY; PRUDENTIAL TRUST
COMPANY; THE GIBRALTAR LIFE
INSURANCE COMPANY LTD.; THE
PRUDENTIAL INSURANCE COMPANY
OF AMERICA; THE PRUDENTIAL
INVESTMENT PORTFOLIOS 2; THE
PRUDENTIAL INVESTMENT
PORTFOLIOS 9; THE PRUDENTIAL
INVESTMENT PORTFOLIOS INC.; THE
PRUDENTIAL INVESTMENT
PORTFOLIOS, INC. 17; THE
PRUDENTIAL SERIES FUND;
BROOKFIELD HIGH INCOME FUND
INC.; BROOKFIELD MORTGAGE
OPPORTUNITY INCOME FUND INC.;
BROOKFIELD SECURITIZED CREDIT
QIF FUND; BROOKFIELD TOTAL
RETURN FUND INC.; CRYSTAL RIVER
CAPITAL INC.; MILLERTON ABS CDO
LTD.; GLOBAL PREFERRED RE
LIMITED; LIICA HOLDINGS, LLC;
LIICA RE I, INC.; LIICA RE II, INC.;
MONUMENTAL LIFE INSURANCE
COMPANY; STONEBRIDGE
CASUALTY INSURANCE COMPANY;
STONEBRIDGE LIFE INSURANCE
COMPANY; STONEBRIDGE
REINSURANCE COMPANY;
TRANSAMERICA ADVISORS LIFE
INSURANCE COMPANY;

TRANSAMERICA ADVISORS LIFE
INSURANCE COMPANY OF NEW
YORK; TRANSAMERICA FINANCIAL
LIFE INSURANCE COMPANY;
TRANSAMERICA INTERNATIONAL
RE (BERMUDA) LTD.;
TRANSAMERICA LIFE (BERMUDA)
LTD.; TRANSAMERICA LIFE
INSURANCE COMPANY;
TRANSAMERICA LIFE
INTERNATIONAL (BERMUDA) LTD.;
WESTERN RESERVE LIFE
ASSURANCE CO. OF OHIO; KORE
ADVISORS LP; SEALINK FUNDING
LIMITED; DZ BANK AG, derivatively, on
behalf of the Trusts Identified in Exhibit 1

Plaintiffs,

-against-

U.S. BANK NATIONAL ASSOCIATION,

Defendant,

-and-

The Trusts Identified in Exhibit 1,

Nominal Defendants.
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TABLE OF CONTENTS
Page
I. NATURE AND SUMMARY OF THE ACTION .............................................................. 1
II. PARTIES ............................................................................................................................ 9
A. Plaintiffs .................................................................................................................. 9
1. AEGON....................................................................................................... 9
2. BlackRock Funds ...................................................................................... 13
3. Brookfield ................................................................................................. 21
4. DZ Bank .................................................................................................... 22
5. Kore........................................................................................................... 23
6. PIMCO ...................................................................................................... 23
7. Prudential .................................................................................................. 56
8. Sealink....................................................................................................... 61
9. TIAA ......................................................................................................... 61
B. Defendants ............................................................................................................ 64
1. U.S. Bank National Association ............................................................... 64
2. The Nominal Defendant Trusts ................................................................. 65
III. OVERVIEW OF THE TRUSTS ...................................................................................... 65
IV. JURISDICTION AND VENUE ....................................................................................... 66
V. PRESUIT DEMAND ON U.S. BANK IS NOT REQUIRED AND
WOULD ALSO BE FUTILE ........................................................................................... 67
VI. BACKGROUND - THE TRUSTEES ROLE AS GATEKEEPER IN THE
SECURITIZATION PROCESS ....................................................................................... 68
VII. U.S. BankS CONTRACTUAL OBLIGATIONS ............................................................ 72
A. The Mortgage Loan Purchase And Sale Agreement............................................. 72
B. The Pooling And Servicing Agreements .............................................................. 74
1. U.S. Banks Duties And Obligations Under The PSAs ............................ 75
-ii-
a) Duty To Provide Notice Of Breaches And
To Enforce Putback Rights ............................................................76
b) U.S. Banks Duties Regarding The Servicers ................................76
c) Duties Upon Knowledge Of An Event Of
Default............................................................................................77
2. The Servicers Duties And Obligations Under The PSAs ........................ 78
a) Duty To Provide Notice Of Breaches And
To Enforce Putback Rights ............................................................78
b) Duty To Perform Prudent And Customary
Servicing Practices .........................................................................79
c) Duty To Perform Prudent Foreclosure
Practices .........................................................................................80
d) Duty To Perform Prudent Servicing
Advances ........................................................................................80
C. The Indentures And Sale Servicing Agreements .................................................. 82
VIII. THE TRUSTS SUFFERED FROM PERVASIVE BREACHES OF
REPRESENTATIONS AND WARRANTIES BY THE SELLERS ............................... 84
A. High Default Rates of the Mortgage Loans And Plummeting Credit
Ratings Are Indicative Of Massive Seller Breaches ............................................. 85
B. The Systemic Disregard Of Underwriting Standards Was
Pervasive During The Relevant Period ................................................................. 86
C. There Is Evidence Of Widespread Breaches Of Representations
And Warranties By The Specific Originators That Sold Loans To
The Trusts ............................................................................................................. 87
1. Wells Fargo ............................................................................................... 88
2. WaMu and Long Beach ............................................................................ 90
3. Countrywide .............................................................................................. 92
4. GreenPoint ................................................................................................ 96
5. First Franklin ............................................................................................. 97
6. New Century ........................................................................................... 100
D. The Systemic Disregard Of Prudent Securitization Standards Was
Pervasive During The Relevant Period ............................................................... 103
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E. There Is Evidence Of Widespread Breaches Of Representations
And Warranties By The Specific Sponsors Of The Trusts ................................. 104
1. Lehman ................................................................................................... 104
2. Credit Suisse (DLJ Mortgage Capital) .................................................... 106
3. WaMu ..................................................................................................... 112
4. Goldman Sachs ....................................................................................... 116
5. Bank of America ..................................................................................... 120
6. UBS ......................................................................................................... 124
7. Merrill Lynch .......................................................................................... 127
8. Bear, Stearns & Co., Inc. ........................................................................ 129
9. RBS ......................................................................................................... 133
10. C-BASS................................................................................................... 136
11. Morgan Stanley ....................................................................................... 139
IX. U.S. BANK KNEW THAT THE TRUSTS WERE FILLED WITH
DEFECTIVE LOANS .................................................................................................... 141
A. The Trusts Poor Performance ............................................................................ 141
B. Credit-Rating Downgrades Of The Certificates Further Supports
The Sellers Problems ......................................................................................... 144
C. U.S. Bank Discovered Widespread Seller Breaches Of
Representations And Warranties In Its Capacity As Servicer ............................ 145
D. U.S. Bank Received Written Notice Of Pervasive And Systemic
Seller Breaches From Financial Guaranty Insurers ............................................ 146
E. U.S. Bank And Its Responsible Officers Repeatedly Received
Written Notice From Certificateholders Of Pervasive And
Systemic Seller Breaches .................................................................................... 149
F. U.S. Bank Selectively Asserted The Trusts Repurchase Rights
Against The Sellers ............................................................................................. 154
G. U.S. Bank Initiated Putback Litigation Against Many Of The
Sellers 155
H. U.S. Bank Attempted To Contract Around Its Liability And
Obligations In Acquiring Bank of Americas Trustee Business ......................... 158
X. THE TRUSTS ALSO SUFFERED FROM PERVASIVE SERVICER
VIOLATIONS ................................................................................................................ 159
-iv-
A. The Servicers Failed To Give Notice Of Seller Breaches Of
Representations and Warranties And Enforce The Sellers
Repurchase Obligations ...................................................................................... 160
B. The Servicers Have Violated Their Prudent Servicing Obligations ................... 164
C. The Servicers Have Violated Their Foreclosure Obligations ............................. 168
D. The Servicers Have Violated Their Modification Obligations ........................... 172
E. The Servicers Have Abused Their Servicing Advances Obligations ................. 173
XI. U.S. BANK HAS KNOWN OF SERVICER VIOLATIONS PLAGUING
THE TRUSTS ................................................................................................................. 176
A. U.S. Bank Itself Was Involved In Government Enforcement
Actions And Litigation Stemming From The Servicers Violations .................. 176
B. U.S. Bank And Its Responsible Officers Received Written Notice
From Certificateholders Of Pervasive And Systemic Servicer
Breaches .............................................................................................................. 178
C. U.S. Bank Had Knowledge Of The Servicers Failures Through
The Monthly Servicer And Remittance Reports ................................................. 179
XII. U.S. BANK FAILED TO DISCHARGE ITS CRITICAL PRE- AND
POST-DEFAULT DUTIES ............................................................................................ 180
A. Failure To Enforce The Trusts Repurchase Rights ........................................... 180
B. Failure To Provide Notice To The Servicers Of Events Of Defaults ................. 180
C. Failure To Act Prudently Subsequent To The Uncured Events Of
Defaults ............................................................................................................... 181
D. Failure To Provide Notice To The Certificateholders Of The
Uncured Events Of Defaults ............................................................................... 182
XIII. U.S. BANK FAILED TO PROTECT THE TRUSTS DUE TO ITS
CONFLICTS OF INTEREST ......................................................................................... 182
A. U.S. Bank Was Economically Beholden To The Mortgage Loan
Sellers 182
B. U.S. Bank Was Engaged In The Same Wrongful Servicing
Activities ............................................................................................................. 183
C. U.S. Bank Originated Defective Loans ............................................................... 184
D. U.S. Bank Refused To Discharge Its Duties In Order To Preserve
Profits 185
XIV. CAUSATION ................................................................................................................. 187
-v-
XV. DAMAGES ..................................................................................................................... 187
XVI. CAUSES OF ACTION ................................................................................................... 188
FIRST CAUSE OF ACTION BREACH OF CONTRACT (On Behalf Of The
Trusts Against U.S. Bank) .............................................................................................. 188
SECOND CAUSE OF ACTION VIOLATION OF THE TRUST INDENTURE
ACT OF 1939, 53 STAT. 1171 (On Behalf Of The Trusts Against U.S.
Bank) ............................................................................................................................... 196
THIRD CAUSE OF ACTION NEGLIGENCE - BREACH OF PRE-DEFAULT
DUTY OF INDEPENDENCE (On Behalf Of The Trusts Against U.S.
Bank) ............................................................................................................................... 199
FOURTH CAUSE OF ACTION BREACH OF FIDUCIARY DUTY DUTY
OF CARE (On Behalf Of The Trusts Against U.S. Bank) ............................................. 201
FIFTH CAUSE OF ACTION NEGLIGENCE DUTY OF CARE (On Behalf Of
The Trusts Against U.S. Bank) ....................................................................................... 203
SIXTH CAUSE OF ACTION BREACH OF FIDUCIARY DUTY BREACH
OF POST-DEFAULT DUTY OF INDEPENDENCE (On Behalf Of The
Trusts Against U.S. Bank) .............................................................................................. 205
XVII. RELIEF REQUESTED ................................................................................................... 207
XVIII. JURY DEMAND ............................................................................................................ 208

-1-
Plaintiffs AEGON (as defined herein); BlackRock Funds (as defined herein); Brookfield
(as defined herein); Deutsche Zentral-Genossenschaftsbank AG, New York Branch, d/b/a DZ
Bank AG, New York Branch (DZ Bank); Kore Advisors, L.P. (Kore); PIMCO (as defined
herein); Prudential (as defined herein); Sealink Funding Limited (Sealink); and TIAA (as
defined herein) (collectively, Plaintiffs) by and through their undersigned attorneys, hereby
bring this derivative complaint (the Complaint) on behalf of and for the benefit of the
residential mortgage-backed securities (RMBS) Trusts listed in Exhibit 1 (Trusts), against
U.S. Bank National Association (U.S. Bank or the Trustee), the Trustee for the Trusts.
I. NATURE AND SUMMARY OF THE ACTION
1. Defendant U.S. Bank is a national banking association and is the Trustee for over
a thousand RMBS trusts originally securitized by more than $1.3 trillion of residential mortgage
loans. Among them are the Trusts at issue in this action: 841 private-label RMBS Trusts
securitized between 2004 and 2008 collateralized with loans worth approximately $771 billion at
the time of securitization. U.S. Bank, as Trustee, is the sole gatekeeper for the protection of the
Trusts and their beneficial certificateholders (the Certificateholders), and must at all times act
in the best interests of the Trusts. As alleged herein, U.S. Bank wholly failed to discharge its
duties and obligations to protect the Trusts. Instead, to protect its own business interests, U.S.
Bank ignored pervasive and systemic deficiencies in the underlying loan pools and the servicing
of those loans and unreasonably refused to take any action. This derivative action seeks to
recover billions of dollars in damages to the Trusts caused by U.S. Banks abdication of
responsibility.
2. RMBS trusts are created to facilitate the securitization and sale of residential
mortgage loans to investors. The trusts assets consist entirely of the underlying loans, and the
principal and interest (P&I) payments on the loans are passed through to the
-2-
certificateholders. Between 2004 and 2008, a handful of large investment banks dominated the
RMBS market and controlled the process from beginning to end. These banks act as sponsors
of the RMBS, acquiring the mortgage loans from originators, who often were affiliates of the
sponsors, or beholden to them through warehouse lending or other financial arrangements. Once
the loans are originated, acquired and selected for securitization, the sponsor creates a trust
where the loans are deposited for the benefit of the Certificateholders. The sponsor also hand-
picks the servicer, often an affiliate of the sponsor or originator, to collect payments on the loans.
Finally, a select number of these same banks that originate, securitize and service RMBS also act
as trustees on other sponsors deals.
3. To ensure the quality of the RMBS and the underlying loans, the Trust documents
generally include representations and warranties from the loan sellers attesting to the quality and
characteristics of the mortgages as well as an agreement to cure, substitute, or repurchase
mortgages that do not comply with those representations and warranties. Because the risk of
non-payment or default on the loans is passed through to investors, other than these
representations and warranties, the large investment banks and other players in the mortgage
securitization industry have no skin in the game once the RMBS are sold to certificateholders.
Instead, their profits are principally derived from the spread between the cost to originate or
purchase loans, how much they can sell them to investors once packaged as securities, as well as
various servicing-related income. Accordingly, volume became the focus, and the quality of the
loans was disregarded.
4. The fundamental role of a trustee in an RMBS securitization is to ensure that there
is at least one independent party, free from any conflicting self-interest, to protect the trust
corpus. Certificateholders have no access to the underlying loan files and other documents
-3-
necessary to confirm compliance with the representations and warranties, cannot monitor the
servicers conduct and performance, cannot act independently to enforce the trusts contractual
rights, and must rely on the trustee to protect their interests. U.S. Bank, as Trustee, was the sole
contractual party in the Trusts securitization process intended to be independent of the
investment banks that sponsored the securitization, the lenders that originated the loans, and the
servicers that were often affiliated with either the sponsors or lenders, or both. Certificateholders
must rely on the Trustee to protect the rights and interests of the trusts.
5. U.S. Bank knew that the pools of loans backing the Trusts were filled with
defective mortgage loans. The abysmal performance of the Trust collateral including spiraling
defaults, delinquencies and foreclosures is outlined on monthly remittance reports that U.S.
Bank, as Trustee, publishes and publicly files with the government. The monthly remittance
reports detail how, by January 2009, the Trusts had suffered collateral losses exceeding $27
billion. On average, nearly one in every four loans in the Trusts was delinquent. Moreover, 280
Trusts had delinquency rates exceeding 30%, and 124 Trusts had delinquency rates of over
45%. By January 2011, the Trusts total losses had increased nearly three-fold to $74 billion,
meaning that 10% of the Trusts entire loan pool had been written off. By the start of 2010,
nearly all of the securities issued by the Trusts had experienced multiple downgrades, with most
reduced to junk status.
6. A steady stream of public disclosures has linked the abject performance of the
Trusts to systemic abandonment of underwriting guidelines, and the deficient and often
fraudulent securitization practices of the sponsors. Highly publicized government investigations,
reports and enforcement actions; high-profile RMBS litigation by government agencies, federal
banks, and institutional investors; and claims and litigation instituted by monoline insurers have
-4-
repeatedly noted the pervasive disregard and systemic abandonment of underwriting
guidelines in the years leading up to the financial crisis. Voluminous complaints in these
proceedings detail gross misstatements in the Trust documents of key metrics concerning the
quality of the underlying loan pools, including loan-to-value ratios (LTVs), owner-occupancy
status, and borrower credit scores as well as the completeness of the loan files themselves.
7. Indeed, U.S. Bank has admitted its knowledge of breaches of representation and
warranties and Events of Default. U.S. Bank sued the same originators and sponsors in the
Trusts at issue here, alleging systemic and pervasive breaches of representations and warranties.
In those actions, U.S. Bank asserted that loans produced by the same originators as the Trusts at
issue here were toxic and riddled with pervasive and severe breaches on a pool-wide basis
at a startling rate as high as 99% in some instances. U.S. Bank also alleged and admitted
that these originators failed to adhere to industry-standard and reasonable underwriting
guidelines in an extremely high percentage of cases and as a result, given these high breach
rates, it is reasonable to infer that breaches of . . . [representations and warranties] exist
throughout the entire pool of mortgage loans in the Trust. U.S. Bank has admitted time and
again to knowledge of these originators abject failure to abide by the very representations and
warranties [they] consistently made to induce the purchase of [] Loans for securitizations, yet
U.S. Bank failed and unreasonably refused to take any action to protect the Trusts against the
same originators and their defective loans.
8. In addition, in one of its actions against Countrywide, one of the largest
originators of loans in the Trusts at issue in this action, U.S. Bank conducted a forensic review
and found an extraordinary sixty-six percent of the sample breached one or more of the
representations and warranties. U.S. Bank claimed this was consistent with Countrywides
-5-
abject failure to abide by the very representations and warranties it consistently made to induce
the purchase of its Loans for securitizations, including the purchase of the Loans by the Trust.
Despite this knowledge, U.S. Bank has not, however, taken any action to protect the Trusts at
issue here, which contain billions of dollars in defective loans from the same originators and
sponsors. Rather, U.S. Bank ignored the breaches and unreasonably refused to act while the
Trusts suffered dramatic and mounting defaults, collateral losses, and other harms.
9. U.S. Bank was further informed of pervasive and systemic deficiencies infecting
the Trusts collateral though putback initiatives led by many of the worlds largest institutional
mortgage investors. These large-scale initiatives several of which have yielded multi-billion
dollar settlements have targeted six of the leading sponsors of non-agency RMBS and cover
wide swaths of the RMBS market, including entire labels and shelves.
10. For example, in December 2011, a group of major institutional investors asked
U.S. Bank, as trustee, to investigate large numbers of ineligible mortgages in loan pools
underlying dozens of JPMorgan sponsored trusts and deficient servicing of those loans. Together
with similar instructions provided to four other trustees of the JPMorgan-sponsored trusts, the
initiative covered more than $95 billion of RMBS issued from 2005 to 2007. Less than two
years later, U.S. Bank and the other trustees were presented with a comprehensive $4.5 billion
settlement offer covering 330 JPMorgan-sponsored trusts.
1
In January 2012, U.S. Bank received
similar written instructions from a group of major institutional investors in dozens of trusts
sponsored by Morgan Stanley or its affiliates (collectively, Morgan Stanley). Together with
other Morgan Stanley-sponsored Trusts, the initiative covered more than $25 billion of RMBS

1
U.S. Banks approval remains pending despite being presented with the settlement offer over
six months ago.
-6-
issued from 2005 to 2007, including 23 Trusts at issue in this action. Additionally, in January
2012, U.S. Bank received similar instructions with respect to $45 billion of Wells Fargo
sponsored RMBS. And in yet another investor-led initiative, U.S. Bank, as trustee, gave its
approval to a $7 billion settlement covering 570 RMBS trusts sponsored by Residential Capital
and its affiliates (ResCap) from 2004 to 2008 with an original face amount of over $320
billion.
2

11. These and other certificateholder-led initiatives sought to putback large
quantities of loans (1) originated by many of the same lenders that also originated large
quantities of the loans sold to the Trusts, including Wells Fargo ($91 billion of loans sold to the
Trusts), Countrywide ($57.3 billion of loans sold to the Trusts), and Citibank ($27.4 billion of
loans sold to the Trusts); and (2) securitized by the same investment banks and financial
institutions that sponsored the Trusts, including Wells Fargo ($60.6 billion of sponsored Trusts);
Citibank ($23.9 billion of sponsored Trusts); and Bear Stearns ($20.9 billion of sponsored
Trusts). In addition, the certificateholder-led initiatives identified and sought recovery of losses
relating to servicing deficiencies by many of the same major servicers of loans backing the
Trusts, including Wells Fargo (servicer to $331.6 billion of loans sold to the Trusts), Citibank
(servicer to $23.4 billion of loans sold to the Trusts), and JPMorgan (servicer to $20.7 billion of
loans sold to the Trusts).
12. Finally, as a major player in the RMBS securitization market and through its
involvement in the major putback initiatives above, U.S. Bank knew that the Trusts were plagued

2
In January 2014, after a nine-week trial, New York Supreme Court Justice Barbara Kapnick
largely approved an $8.5 billion settlement resolving mortgage repurchase claims for 530 RMBS
trusts issued by Countrywide Financial Corporation and its affiliates (Countrywide). That
initiative began in October 2010 and covers more than $424 billion of RMBS issued from 2004
to 2008. Countrywide is one of the largest originators of loans in the Trusts.
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with servicer violations. Indeed, many of the servicers to the Trusts have faced federal and state
regulatory enforcement actions which have led to landmark settlements, including the $25 billion
National Mortgage Settlement entered into between forty-nine State Attorneys General and
some of the Trusts servicers. Notably, without receiving certificateholder approval, many of
these settlement agreements effectively permit the servicers to use trust assets to finance their
settlement payments for their own wrongdoing.
13. Moreover, U.S. Bank itself was the target of government investigations and
lawsuits regarding its deficient servicing operations. For example, during the fourth quarter of
2010, the Federal Reserve, the Office of the Comptroller of the Currency (OCC), the Federal
Deposit Insurance Corporation (FDIC), and the Office of Thrift Supervision (OTS)
conducted on-site reviews of the adequacy of controls and governance over servicers foreclosure
processes at U.S. Bank. The reviews uncovered significant problems in foreclosure processing at
U.S. Bank, including critical weaknesses in [U.S. Banks] foreclosure governance processes,
foreclosure document preparation processes, and oversight and monitoring of third-party
vendors, including foreclosure attorneys. Based on the deficiencies in the review and the risk of
additional issues as a result of weak controls and processes, the Federal Reserve Board initiated
formal enforcement actions requiring U.S. Bancorp, the corporate parent of U.S. Bank, to
address its pattern of misconduct and negligence related to deficient practices in residential
mortgage loan servicing and foreclosure processing. Ultimately, U.S. Bank entered into a
consent order with the Federal Reserve Board, which found that U.S. Bank had engaged in
unsafe or unsound practices with respect to the manner in which [U.S. Bank] handled various
foreclosure and related activities.
-8-
14. Under the governing Pooling and Servicing Agreements (PSA), upon U.S.
Banks knowledge of an Event of Default by a servicer, U.S. Bank is obligated to provide written
notice of the default to the servicer. U.S. Bank systematically failed, however, to provide notice
to the servicers of their defaults because U.S. Bank did not want to jeopardize its close business
relationships with the servicers. Moreover, U.S. Bank, which also acts as a servicer for billions
of dollars of other RMBS, has itself engaged in the same improper and illicit servicing activities
that plagued the Trusts. Similarly, U.S. Bank originated hundreds of millions of dollars in loans
that have been securitized in other RMBS and that contain pervasive breaches of representations
and warranties. Many of the same entities that act as servicers for the Trusts also service these
defective U.S. Bank-originated loans. Thus, U.S. Bank, acting in its own self-interest, refused to
provide notice to the servicers of their defaults to avoid scrutiny of its own servicing business
and evade liability for its own defective loans.
15. Further, under the PSAs, within sixty to ninety days after the occurrence of an
Event of Default, U.S. Bank is obligated to transmit by mail to all Certificateholders notice of
each Event of Default known to U.S. Bank, unless the Event of Default has been cured or
waived. Although Events of Default occurred and were not and have not been cured or
waived, U.S. Bank has similarly failed to provide written notice to the Certificateholders of the
Events of Default. U.S. Bank has covered up the Events of Default for several self-interested
reasons. Among other things, as noted above, providing notice of the servicers default could
jeopardize U.S. Banks close business relationships with the servicers and lead to U.S. Banks
own potential liability in its capacity as an originator, sponsor and servicer to other RMBS trusts.
Moreover, as discussed in greater detail below, had U.S. Bank provided notice of an Event of
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Default, it would have greatly increased U.S. Banks liabilities and duties, but U.S. Banks
compensation under the PSA would have remained the same.
16. Finally, after the Events of Default, U.S. Bank failed to exercise its rights under
the Governing Agreements as a prudent person would, under those circumstances, in the conduct
of its own affairs. U.S. Bank did nothing to protect the Trust and Certificateholders, choosing
instead to deliberately ignore the egregious Events of Default for its own benefit and to the
detriment of the Trusts.
II. PARTIES
A. Plaintiffs
1. AEGON
17. The following plaintiffs are collectively referred to as AEGON.
18. Plaintiff Monumental Life Insurance Company is a corporation organized under
the laws of the State of Iowa with its principal place of business in Cedar Rapids,
Iowa. Monumental Life Insurance Company is a Certificateholder in the Trusts identified in
Exhibit 1 attached hereto. Monumental Life Insurance Company has been a certificateholder of
these Trusts at the time of the transactions of which it complaints, or interests therein devolved
upon it by operation of law in accordance with New York General Obligations Law 13-107.
19. Plaintiff Stonebridge Reinsurance Company is a corporation organized under the
laws of the State of Vermont with its principal place of business in Burlington,
Vermont. Stonebridge Reinsurance Company is a Certificateholder in the Trusts identified in
Exhibit 1 attached hereto. Stonebridge Reinsurance Company has been a certificateholder of
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20. Plaintiff Transamerica International Re (Bermuda) Ltd. is a corporation organized
under the laws of Bermuda with its principal place of business in Hamilton, Bermuda.
Transamerica International Re (Bermuda) Ltd. is a Certificateholder in the Trusts identified in
Exhibit 1 attached hereto. Transamerica International Re (Bermuda) Ltd. has been a
certificateholder of these Trusts at the time of the transactions of which it complaints, or interests
therein devolved upon it by operation of law in accordance with New York General Obligations
Law 13-107.
21. Plaintiff Transamerica Life International (Bermuda) Ltd. is a corporation
organized under the laws of Bermuda with its principal place of business in Hamilton,
Bermuda. Transamerica Life International (Bermuda) Ltd. is a Certificateholder in the Trusts
identified in Exhibit 1 attached hereto. Transamerica Life International (Bermuda) Ltd. has been
a certificateholder of these Trusts at the time of the transactions of which it complaints, or
interests therein devolved upon it by operation of law in accordance with New York General
Obligations Law 13-107.
22. Plaintiff Transamerica Advisors Life Insurance Company of New York is a
corporation organized under the laws of the State of New York with its principal place of
business in Harrison, New York. Transamerica Advisors Life Insurance Company of New York
is a Certificateholder in the Trusts identified in Exhibit 1 attached hereto. Transamerica Advisors
Life Insurance Company of New York has been a certificateholder of these Trusts at the time of
the transactions of which it complaints, or interests therein devolved upon it by operation of law
in accordance with New York General Obligations Law 13-107.
23. Plaintiff Transamerica Financial Life Insurance Company is a corporation
organized under the laws of the State of New York with its principal place of business in Cedar
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Rapids, Iowa. Transamerica Financial Life Insurance Company is a Certificateholder in the
Trusts identified in Exhibit 1 attached hereto. Transamerica Financial Life Insurance Company
has been a certificateholder of these Trusts at the time of the transactions of which it complaints,
or interests therein devolved upon it by operation of law in accordance with New York General
24. Plaintiff Transamerica Life Insurance Company is a corporation organized under
the laws of the State of Iowa with its principal place of business in Cedar Rapids,
Iowa. Transamerica Life Insurance Company is a Certificateholder in the Trusts identified in
Exhibit 1 attached hereto. Transamerica Life Insurance Company has been a certificateholder of
25. Plaintiff Western Reserve Life Assurance Co. of Ohio is a corporation organized
under the laws of the State of Ohio with its principal place of business in Columbus,
Ohio. Western Reserve Life Assurance Co. of Ohio is a Certificateholder in the Trusts identified
in Exhibit 1 attached hereto. Western Reserve Life Assurance Co. of Ohio has been a
Law 13-107.
26. Plaintiff LIICA Re II, Inc. is a corporation organized under the laws of the State
of Vermont with its principal place of business in Burlington, Vermont. LIICA Re II, Inc. is a
Certificateholder in the Trusts identified in Exhibit 1 attached hereto. LIICA Re II, Inc. has been
-12-
27. Plaintiff LIICA Re I, Inc. is a corporation organized under the laws of the State of
Vermont with its principal place of business in Burlington, Vermont. LIICA Re I, Inc. is a
Certificateholder in the Trusts identified in Exhibit 1 attached hereto. LIICA Re I, Inc. has been
28. Plaintiff LIICA Holdings, LLC is a limited liability company organized under the
laws of the State of Delaware with its principal place of business in Wilmington,
Delaware. LIICA Holdings, LLC is a Certificateholder in the Trusts identified in Exhibit 1
attached hereto. LIICA Holdings, LLC has been a certificateholder of these Trusts at the time of
the transactions of which it complaints, or interests therein devolved upon it by operation of law
in accordance with New York General Obligations Law 13-107.
29. Plaintiff Stonebridge Casualty Insurance Company is a corporation organized
under the laws of the State of Ohio with its principal place of business in Columbus,
Ohio. Stonebridge Casualty Insurance Company is a Certificateholder in the Trusts identified in
Exhibit 1 attached hereto. Stonebridge Casualty Insurance Company has been a certificateholder
of these Trusts at the time of the transactions of which it complaints, or interests therein devolved
30. Plaintiff Stonebridge Life Insurance Company is a corporation organized under
the laws of the State of Vermont with its principal place of business in Rutland,
Vermont. Stonebridge Life Insurance Company is a Certificateholder in the Trusts identified in
-13-
Exhibit 1 attached hereto. Stonebridge Life Insurance Company has been a certificateholder of
31. Plaintiff Transamerica Advisors Life Insurance Company is a corporation
organized under the laws of the State of Arkansas with its principal place of business in Little
Rock, Arkansas. Transamerica Advisors Life Insurance Company is a Certificateholder in the
Trusts identified in Exhibit 1 attached hereto. Transamerica Advisors Life Insurance Company
has been a certificateholder of these Trusts at the time of the transactions of which it complaints,
or interests therein devolved upon it by operation of law in accordance with New York General
32. Plaintiff Transamerica Life (Bermuda) Ltd. is a corporation organized under the
laws of Bermuda with its principal place of business in Hamilton, Bermuda. Transamerica Life
(Bermuda) Ltd. is a Certificateholder in the Trusts identified in Exhibit 1 attached hereto.
Transamerica Life (Bermuda) Ltd. has been a certificateholder of these Trusts at the time of the
transactions of which it complaints, or interests therein devolved upon it by operation of law in
accordance with New York General Obligations Law 13-107.
33. Plaintiff Global Preferred Re Limited is a corporation organized under the laws of
Bermuda with its principal place of business in Hamilton, Bermuda. Global Preferred Re Limited
is a Certificateholder in the Trusts identified in Exhibit 1 attached hereto. Global Preferred Re
Limited has been a certificateholder of these Trusts at the time of the transactions of which it
complaints, or interests therein devolved upon it by operation of law in accordance with New
York General Obligations Law 13-107.
2. BlackRock Funds
34. The following plaintiffs are collectively referred to as BlackRock Funds.
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35. Plaintiff BlackRock Income Trust, Inc. is a registered investment company with
its principal place of business in Wilmington Delaware. BlackRock Income Trust, Inc. is a
Certificateholder in the Trusts identified in Exhibit 1 attached hereto. BlackRock Income Trust,
Inc. has been a Certificateholder of these Trusts at the time of the transactions of which it
complains, or its interests therein devolved upon it by operation of law in accordance with New
York General Obligations Law 13107.
36. Plaintiff BlackRock Enhanced Government Fund, Inc. is a registered investment
company with its principal place of business in Wilmington Delaware. BlackRock Enhanced
Government Fund, Inc. is a Certificateholder in the Trusts identified in Exhibit 1 attached hereto.
BlackRock Enhanced Government Fund, Inc. has been a Certificateholder of these Trusts at the
time of the transactions of which it complains, or its interests therein devolved upon it by
operation of law in accordance with New York General Obligations Law 13107.
37. Plaintiff BlackRock Fixed Income Value Opportunities is a registered investment
company with its principal place of business in Wilmington, Delaware. BlackRock Fixed
Income Value Opportunities is a Certificateholder in the Trusts identified in Exhibit 1 attached
hereto. BlackRock Fixed Income Value Opportunities has been a Certificateholder of these
Trusts at the time of the transactions of which it complains, or its interests therein devolved upon
it by operation of law in accordance with New York General Obligations Law 13107.
38. Plaintiff BlackRock US Mortgage is a registered investment company with its
principal place of business in in Wilmington, Delaware. BlackRock US Mortgage is a
Certificateholder in the Trusts identified in Exhibit 1 attached hereto. BlackRock US Mortgage
has been a Certificateholder of these Trusts at the time of the transactions of which it complains,
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or its interests therein devolved upon it by operation of law in accordance with New York
General Obligations Law 13107.
39. Plaintiff BlackRock Allocation Target Shares: Series S Portfolio is a registered
investment company with its principal place of business in Wilmington, Delaware. BlackRock
Allocation Target Shares: Series S Portfolio is a Certificateholder in the Trusts identified in
Exhibit 1 attached hereto. BlackRock Allocation Target Shares: Series S Portfolio has been a
Certificateholder of these Trusts at the time of the transactions of which it complains, or its
Obligations Law 13107.
40. Plaintiff BlackRock Core Bond Trust is a registered investment company with its
principal place of business address in Wilmington, Delaware. BlackRock Core Bond Trust is a
Certificateholder in the Trusts identified in Exhibit 1 attached hereto. BlackRock Core Bond
Trust has been a Certificateholder of these Trusts at the time of the transactions of which it
41. Plaintiff BlackRock Multi-Asset Income Non-Agency MBS Portfolio is a
registered investment company with its principal place of business in in Wilmington, Delaware.
BlackRock Multi-Asset Income Non-Agency MBS Portfolio is a Certificateholder in the Trusts
identified in Exhibit 1 attached hereto. BlackRock Multi-Asset Income Non-Agency MBS
Portfolio has been a Certificateholder of these Trusts at the time of the transactions of which it
-16-
42. Plaintiff BlackRock Strategic Income Opportunities Portfolio is a registered
investment company with its principal place of business in in Wilmington, Delaware.
BlackRock Strategic Income Opportunities Portfolio is a Certificateholder in the Trusts identified
in Exhibit 1 attached hereto. BlackRock Strategic Income Opportunities Portfolio has been a
43. Plaintiff BlackRock Total Return Portfolio (Ins Series) is a registered
BlackRock Total Return Portfolio (Ins Series) is a Certificateholder in the Trusts identified in
Exhibit 1 attached hereto. BlackRock Total Return Portfolio (Ins Series) has been a
44. Plaintiff BlackRock CoreAlpha Bond Master Portfolio is a collective trust fund
with its principal place of business in San Francisco, California. BlackRock CoreAlpha Bond
Master Portfolio is a Certificateholder in the Trusts identified in Exhibit 1 attached hereto.
BlackRock CoreAlpha Bond Master Portfolio has been a Certificateholder of these Trusts at the
45. Plaintiff BlackRock CoreAlpha Bond Fund E is a collective trust fund with its
principal place of business in San Francisco, California. BlackRock CoreAlpha Bond Fund E is
a Certificateholder in the Trusts identified in Exhibit 1 attached hereto. BlackRock CoreAlpha
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Bond Fund E has been a Certificateholder of these Trusts at the time of the transactions of which
it complains, or its interests therein devolved upon it by operation of law in accordance with
New York General Obligations Law 13107.
46. Plaintiff BlackRock Core Active Bond Fund B is a collective trust fund with its
principal place of business in San Francisco, California. BlackRock Core Active Bond Fund B is
a Certificateholder in the Trusts identified in Exhibit 1 attached hereto. BlackRock Core Active
Bond Fund B has been a Certificateholder of these Trusts at the time of the transactions of which
47. Plaintiff BlackRock CorePlus Bond Fund B is a collective trust fund with its
principal place of business in San Francisco, California. BlackRock CorePlus Bond Fund B is a
Certificateholder in the Trusts identified in Exhibit 1 attached hereto. BlackRock CorePlus Bond
Fund B has been a Certificateholder of these Trusts at the time of the transactions of which it
48. Plaintiff BlackRock Core Active LIBOR Fund B is a collective trust fund with its
principal place of business in San Francisco, California. BlackRock Core Active LIBOR Fund B
is a Certificateholder in the Trusts identified in Exhibit 1 attached hereto. BlackRock Core
Active LIBOR Fund B has been a Certificateholder of these Trusts at the time of the transactions
of which it complains, or its interests therein devolved upon it by operation of law in accordance
with New York General Obligations Law 13107.
49. Plaintiff BlackRock Core Bond Portfolio is a registered investment company with
its principal place of business in in Wilmington, Delaware. BlackRock Core Bond Portfolio is a
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Certificateholder in the Trusts identified in Exhibit 1 attached hereto. BlackRock Core Bond
50. Plaintiff BlackRock Fixed Income GlobalAlpha Master Fund Ltd. is a Cayman
Islands limited company with its principal place of business in San Francisco, California.
BlackRock Fixed Income GlobalAlpha Master Fund Ltd. is a Certificateholder in the Trusts
identified in Exhibit 1 attached hereto. BlackRock Fixed Income GlobalAlpha Master Fund Ltd.
51. Plaintiff BlackRock Low Duration Bond Portfolio is a registered investment
company with its principal place of business in in Wilmington, Delaware. BlackRock Low
Duration Bond Portfolio is a Certificateholder in the Trusts identified in Exhibit 1 attached
hereto. BlackRock Low Duration Bond Portfolio has been a Certificateholder of these Trusts at
the time of the transactions of which it complains, or its interests therein devolved upon it by
52. Plaintiff BlackRock Funds II, Inflation Protected Bond Portfolio is a registered
BlackRock Funds II, Inflation Protected Bond Portfolio is a Certificateholder in the Trusts
identified in Exhibit 1 attached hereto. BlackRock Funds II, Inflation Protected Bond Portfolio
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53. Plaintiff BlackRock Income Opportunity Trust is a registered investment
company with its principal place of business in in Wilmington, Delaware. BlackRock Income
Opportunity Trust is a Certificateholder in the Trusts identified in Exhibit 1 attached hereto.
BlackRock Income Opportunity Trust has been a Certificateholder of these Trusts at the time of
the transactions of which it complains, or its interests therein devolved upon it by operation of
law in accordance with New York General Obligations Law 13107.
54. Plaintiff BlackRock Multi-Sector Income Trust is a registered investment
company with its principal place of business in in Wilmington, Delaware. BlackRock Multi-
Sector Income Trust is a Certificateholder in the Trusts identified in Exhibit 1 attached hereto.
BlackRock Multi-Sector Income Trust has been a Certificateholder of these Trusts at the time of
55. Plaintiff BlackRock Total Return V.I. Portfolio (Ins - Var Ser) is a registered
BlackRock Total Return V.I. Portfolio (Ins - Var Ser) is a Certificateholder in the Trusts identified
in Exhibit 1 attached hereto. BlackRock Total Return V.I. Portfolio (Ins - Var Ser) has been a
56. Plaintiff BlackRock Balanced Capital Portfolio (FI) is a registered investment
company with its principal place of business in in Wilmington, Delaware. BlackRock Balanced
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Capital Portfolio (FI) is a Certificateholder in the Trusts identified in Exhibit 1 attached hereto.
BlackRock Balanced Capital Portfolio (FI) has been a Certificateholder of these Trusts at the
57. Plaintiff BlackRock Limited Duration Income Trust is a registered investment
company with its principal place of business in in Wilmington, Delaware. BlackRock Limited
Duration Income Trust is a Certificateholder in the Trusts identified in Exhibit 1 attached hereto.
BlackRock Limited Duration Income Trust has been a Certificateholder of these Trusts at the
58. Plaintiff BlackRock Managed Volatility V.I. Fund (FI) is a registered investment
company with its principal place of business in in Wilmington, Delaware. BlackRock Managed
Volatility V.I. Fund (FI) is a Certificateholder in the Trusts identified in Exhibit 1 attached hereto.
BlackRock Managed Volatility V.I. Fund (FI) has been a Certificateholder of these Trusts at the
59. Plaintiff BlackRock Secured Credit Portfolio is a registered investment company
with its principal place of business in in Wilmington, Delaware. BlackRock Secured Credit
Portfolio is a Certificateholder in the Trusts identified in Exhibit 1 attached hereto. BlackRock
Secured Credit Portfolio has been a Certificateholder of these Trusts at the time of the
transactions of which it complains, or its interests therein devolved upon it by operation of law in
accordance with New York General Obligations Law 13107.
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60. Plaintiff BlackRock World Income Fund, Inc. is a registered investment company
with its principal place of business in in Wilmington, Delaware. BlackRock World Income Fund,
Inc. is a Certificateholder in the Trusts identified in Exhibit 1 attached hereto. BlackRock World
Income Fund, Inc. has been a Certificateholder of these Trusts at the time of the transactions of
which it complains, or its interests therein devolved upon it by operation of law in accordance
3. Brookfield
61. The following plaintiffs are collectively referred to as Brookfield.
62. Plaintiff Brookfield High Income Fund Inc. is a corporation organized under the
laws of the State of Maryland. Brookfield High Income Fund Inc. is a Certificateholder in the
Trusts identified in Exhibit 1 attached hereto. Brookfield High Income Fund Inc. has been a
Law 13-107.
63. Plaintiff Brookfield Mortgage Opportunity Income Fund Inc. is a corporation
organized under the laws of the State of Maryland. Brookfield Mortgage Opportunity Income
Fund Inc. is a Certificateholder in the Trusts identified in Exhibit 1 attached hereto. Brookfield
Mortgage Opportunity Income Fund Inc. has been a certificateholder of these Trusts at the time
of the transactions of which it complaints, or interests therein devolved upon it by operation of
law in accordance with New York General Obligations Law 13-107.
64. Plaintiff Brookfield Securitized Credit QIF Fund is an Irish qualifying investor
fund (and a sub-fund of Brookfield Investment Funds (QIF) plc, an Irish public limited
company). Brookfield Securitized Credit QIF Fund is a Certificateholder in the Trusts identified
in Exhibit 1 attached hereto. Brookfield Securitized Credit QIF Fund has been a
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Law 13-107.
65. Plaintiff Brookfield Total Return Fund Inc. is a corporation organized under the
laws of the State of Maryland. Brookfield Total Return Fund Inc. is a Certificateholder in the
Trusts identified in Exhibit 1 attached hereto. Brookfield Total Return Fund Inc. has been a
Law 13-107.
66. Plaintiff Crystal River Capital Inc. is a corporation organized under the laws of
the State of Maryland. Crystal River Capital Inc. is a Certificateholder in the Trusts identified in
Exhibit 1 attached hereto. Crystal River Capital Inc. has been a certificateholder of these Trusts
at the time of the transactions of which it complaints, or interests therein devolved upon it by
operation of law in accordance with New York General Obligations Law 13-107.
67. Plaintiff Millerton ABS CDO Ltd. is a Cayman exempted company with limited
liability. Millerton ABS CDO Ltd. is a Certificateholder in the Trusts identified in Exhibit 1
attached hereto. Millerton ABS CDO Ltd. has been a certificateholder of these Trusts at the time
of the transactions of which it complaints, or interests therein devolved upon it by operation of
law in accordance with New York General Obligations Law 13-107.
4. DZ Bank
68. Plaintiff DZ Bank is a commercial bank incorporated in Germany. DZ Bank
maintains an office at 609 Fifth Avenue, New York, New York, 10017. DZ Bank is a
Certificateholder in the Trusts identified in Exhibit 1 attached hereto. DZ Bank has been a
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5. Kore
69. Kore is a Delaware Limited Partnership with its principal place of business
located at 1501 Corporate Drive, Suite 230, Boynton Beach, Florida 33426. Kore is the
investment manager to Kore Fixed Income Fund Ltd., a private fund formed under the laws of
the Cayman Islands and Sunrise Partners Limited Partnership, a private fund formed under the
laws of Delaware (collectively, the Private Funds). Kore, through the Private Funds, is a
Certificateholder in the Trusts identified in Exhibit 1 attached hereto. Kore, through the Private
Funds, has been a Certificateholder of these Trusts at the time of the transactions of which it
6. PIMCO
70. The following plaintiffs are collectively referred to as PIMCO.
71. Plaintiff Fixed Income SHares (Series R) is a Massachusetts business trust.
Plaintiff Fixed Income SHares (Series R) is a Certificateholder in the Trusts identified in Exhibit
1 attached hereto. Plaintiff Fixed Income SHares (Series R) has been a Certificateholder of these
72. Plaintiff Fixed Income SHares: Series C is a Massachusetts business trust.
Plaintiff Fixed Income SHares: Series C is a Certificateholder in the Trusts identified in Exhibit 1
attached hereto. Plaintiff Fixed Income SHares: Series C has been a Certificateholder of these
-24-
73. Plaintiff Fixed Income SHares: Series LD is a Massachusetts business trust.
Plaintiff Fixed Income SHares: Series LD is a Certificateholder in the Trusts identified in Exhibit
1 attached hereto. Plaintiff Fixed Income SHares: Series LD has been a Certificateholder of
these Trusts at the time of the transactions of which it complains, or its interests therein devolved
upon it by operation of law in accordance with New York General Obligations Law 13107.
74. Plaintiff Fixed Income SHares: Series M is a Massachusetts business trust.
Plaintiff Fixed Income SHares: Series M is a Certificateholder in the Trusts identified in Exhibit
1 attached hereto. Plaintiff Fixed Income SHares: Series M has been a Certificateholder of these
75. Plaintiff LVS I LLC is a Delaware limited liability company. LVS I LLC is a
Certificateholder in the Trusts identified in Exhibit 1 attached hereto. LVS I LLC has been a
76. Plaintiff LVS I SPE XIV LLC is a Delaware limited liability company. LVS I
SPE XIV LLC is a Certificateholder in the Trusts identified in Exhibit 1 attached hereto. LVS I
SPE XIV LLC has been a Certificateholder of these Trusts at the time of the transactions of
77. Plaintiff LVS II LLC is a Delaware limited liability company. LVS II LLC is a
Certificateholder in the Trusts identified in Exhibit 1 attached hereto. LVS II LLC has been a
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78. Plaintiff PARS Aspire Fund is a Socit responsabilit limite, or private limited
liability corporate entity, existing under the laws of Luxembourg. Plaintiff PARS Aspire Fund is
a Certificateholder in the Trusts identified in Exhibit 1 attached hereto. PARS Aspire Fund has
been a Certificateholder of these Trusts at the time of the transactions of which it complains, or
its interests therein devolved upon it by operation of law in accordance with New York General
79. Plaintiff PCM Fund, Inc. is a corporation existing under the laws of Maryland,
with its principal place of business located at 1345 Avenue of the Americas, New York, New
York. PCM Fund, Inc. is a Certificateholder in the Trusts identified in Exhibit 1 attached hereto.
PCM Fund, Inc. has been a Certificateholder of these Trusts at the time of the transactions of
80. Plaintiff PIMCO Absolute Return Strategy 3D Offshore Fund Ltd. is a limited
partnership existing under the laws of the Cayman Islands. PIMCO Absolute Return Strategy 3D
Offshore Fund Ltd. is a Certificateholder in the Trusts identified in Exhibit 1 attached hereto.
PIMCO Absolute Return Strategy 3D Offshore Fund Ltd. has been a Certificateholder of these
81. Plaintiff PIMCO Absolute Return Strategy II Master Fund LDC is a limited
duration company existing under the laws of the Cayman Islands. PIMCO Absolute Return
Strategy II Master Fund LDC is a Certificateholder in the Trusts identified in Exhibit 1 attached
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hereto. PIMCO Absolute Return Strategy II Master Fund LDC has been a Certificateholder of
82. Plaintiff PIMCO Absolute Return Strategy III Master Fund LDC is a limited
Strategy III Master Fund LDC is a Certificateholder in the Trusts identified in Exhibit 1 attached
hereto. PIMCO Absolute Return Strategy III Master Fund LDC has been a Certificateholder of
83. Plaintiff PIMCO Absolute Return Strategy III Overlay Master Fund Ltd. is a
limited partnership existing under the laws of the Cayman Islands. PIMCO Absolute Return
Strategy III Overlay Master Fund Ltd. is a Certificateholder in the Trusts identified in Exhibit 1
attached hereto. PIMCO Absolute Return Strategy III Overlay Master Fund Ltd. has been a
84. Plaintiff PIMCO Absolute Return Strategy IV IDF LLC is a limited liability
company existing under the laws of Delaware. PIMCO Absolute Return Strategy IV IDF LLC is
a Certificateholder in the Trusts identified in Exhibit 1 attached hereto Plaintiff PIMCO Absolute
Return Strategy IV IDF LLC has been a Certificateholder of these Trusts at the time of the
-27-
85. Plaintiff PIMCO Absolute Return Strategy IV Master Fund LDC is a limited
Strategy IV Master Fund LDC is a Certificateholder in the Trusts identified in Exhibit 1 attached
hereto. PIMCO Absolute Return Strategy IV Master Fund LDC has been a Certificateholder of
86. Plaintiff PIMCO Absolute Return Strategy V Master Fund LDC is a limited
Strategy V Master Fund LDC is a Certificateholder in the Trusts identified in Exhibit 1 attached
hereto. PIMCO Absolute Return Strategy V Master Fund LDC has been a Certificateholder of
87. Plaintiff PIMCO Canada Canadian CorePLUS Bond Trust is a trust existing under
the laws of Canada, which is managed by PIMCO Canada. PIMCO Canada Canadian
CorePLUS Bond Trust is a Certificateholder in the Trusts identified in Exhibit 1 attached hereto.
PIMCO Canada Canadian CorePLUS Bond Trust has been a Certificateholder of these Trusts at
88. Plaintiff PIMCO Canada Canadian CorePLUS Long Bond Trust is a trust existing
under the laws of Canada, which is managed by PIMCO Canada. PIMCO Canada Canadian
CorePLUS Long Bond Trust is a Certificateholder in the Trusts identified in Exhibit 1 attached
hereto. PIMCO Canada Canadian CorePLUS Long Bond Trust has been a Certificateholder of
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89. Plaintiff PIMCO Canada Canadian Tactical Bond Trust is a trust existing under
the laws of Canada, which is managed by PIMCO Canada. PIMCO Canada Canadian Tactical
Bond Trust is a Certificateholder in the Trusts identified in Exhibit 1 attached hereto. PIMCO
Canada Canadian Tactical Bond Trust has been a Certificateholder of these Trusts at the time of
90. Plaintiff PIMCO Canadian Total Return Bond Fund is a trust existing under the
laws of Canada, which is managed by PIMCO Canada. PIMCO Canadian Total Return Bond
Fund is a Certificateholder in the Trusts identified in Exhibit 1 attached hereto. PIMCO
Canadian Total Return Bond Fund has been a Certificateholder of these Trusts at the time of the
91. Plaintiff PIMCO Combined Alpha Strategies Master Fund LDC is a limited
duration company existing under the laws of the Cayman Islands. PIMCO Combined Alpha
Strategies Master Fund LDC is a Certificateholder in the Trusts identified in Exhibit 1 attached
hereto. PIMCO Combined Alpha Strategies Master Fund LDC has been a Certificateholder of
92. Plaintiff PIMCO Corporate & Income Opportunity Fund is a business trust
existing under the laws of Massachusetts. PIMCO Corporate & Income Opportunity Fund is a
Certificateholder in the Trusts identified in Exhibit 1 attached hereto. PIMCO Corporate &
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Income Opportunity Fund has been a Certificateholder of these Trusts at the time of the
93. Plaintiff PIMCO Corporate & Income Strategy Fund is a business trust existing
under the laws of Massachusetts. PIMCO Corporate & Income Strategy Fund is a
Certificateholder in the Trusts identified in Exhibit 1 attached hereto. PIMCO Corporate &
Income Strategy Fund has been a Certificateholder of these Trusts at the time of the transactions
94. Plaintiff PIMCO Distressed Senior Credit Opportunities Fund II, L.P. is a limited
partnership existing under the laws of Delaware. PIMCO Distressed Senior Credit Opportunities
Fund II, L.P. is a Certificateholder in the Trusts identified in Exhibit 1 attached hereto. PIMCO
Distressed Senior Credit Opportunities Fund II, L.P. has been a Certificateholder of these Trusts
at the time of the transactions of which it complains, or its interests therein devolved upon it by
95. Plaintiff PIMCO Dynamic Credit Income Fund is a business trust existing under
the laws of Massachusetts. PIMCO Dynamic Credit Income Fund is a Certificateholder in the
Trusts identified in Exhibit 1 attached hereto. PIMCO Dynamic Credit Income Fund has been a
96. Plaintiff PIMCO Dynamic Income Fund is a business trust existing under the laws
of Massachusetts. PIMCO Dynamic Income Fund is a Certificateholder in the Trusts identified
-30-
in Exhibit 1 attached hereto. PIMCO Dynamic Income Fund has been a Certificateholder of
97. Plaintiff PIMCO Equity Series: PIMCO Balanced Income Fund is a business trust
existing under the laws of Massachusetts. PIMCO Equity Series: PIMCO Balanced Income
Fund is a Certificateholder in the Trusts identified in Exhibit 1 attached hereto. PIMCO Equity
Series: PIMCO Balanced Income Fund has been a Certificateholder of these Trusts at the time of
98. Plaintiff PIMCO ETF Trust: PIMCO Low Duration Exchange-Traded Fund is a
statutory trust existing under the laws of Delaware. PIMCO ETF Trust: PIMCO Low Duration
Exchange-Traded Fund is a Certificateholder in the Trusts identified in Exhibit 1 attached hereto.
PIMCO ETF Trust: PIMCO Low Duration Exchange-Traded Fund has been a Certificateholder
of these Trusts at the time of the transactions of which it complains, or its interests therein
devolved upon it by operation of law in accordance with New York General Obligations Law
13107.
99. Plaintiff PIMCO ETF Trust: PIMCO Total Return Exchange-Traded Fund is a
statutory trust existing under the laws of Delaware. PIMCO ETF Trust: PIMCO Total Return
Exchange-Traded Fund is a Certificateholder in the Trusts identified in Exhibit 1 attached hereto.
PIMCO ETF Trust: PIMCO Total Return Exchange-Traded Fund has been a Certificateholder of
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100. Plaintiff PIMCO Funds: PIMCO EM Fundamental IndexPLUS
AR Strategy
Fund is a business trust existing under the laws of Massachusetts. PIMCO Funds: PIMCO EM
Fundamental IndexPLUS
AR Strategy Fund is a Certificateholder in the Trusts identified in

Exhibit 1 attached hereto. PIMCO Funds: PIMCO EM Fundamental IndexPLUS
AR Strategy
Fund has been a Certificateholder of these Trusts at the time of the transactions of which it
101. Plaintiff PIMCO Funds: PIMCO International Fundamental IndexPLUS
AR
Strategy Fund is a business trust existing under the laws of Massachusetts. PIMCO Funds:
PIMCO International Fundamental IndexPLUS
AR Strategy Fund is a Certificateholder in the

Trusts identified in Exhibit 1 attached hereto. PIMCO Funds: PIMCO EM Fundamental
IndexPLUS
AR Strategy Fund has been a Certificateholder of these Trusts at the time of the
102. Plaintiff PIMCO Funds: PIMCO Small Company Fundamental IndexPLUS
AR
PIMCO Small Company Fundamental IndexPLUS
AR Strategy Fund is a Certificateholder in

the Trusts identified in Exhibit 1 attached hereto. PIMCO Funds: PIMCO Small Company
Fundamental IndexPLUS
AR Strategy Fund has been a Certificateholder of these Trusts at the

103. Plaintiff PIMCO Funds: PIMCO CommoditiesPLUS
Strategy Fund is a business

trust existing under the laws of Massachusetts. PIMCO Funds: PIMCO CommoditiesPLUS

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Strategy Fund is a Certificateholder in the Trusts identified in Exhibit 1 attached hereto. PIMCO
Funds: PIMCO CommoditiesPLUS
Strategy Fund has been a Certificateholder of these Trusts

104. Plaintiff PIMCO Funds: PIMCO Commodity Real Return Strategy Fund
is a
business trust existing under the laws of Massachusetts. PIMCO Funds: PIMCO Commodity
Real Return Strategy Fund
is a Certificateholder in the Trusts identified in Exhibit 1 attached

hereto. PIMCO Funds: PIMCO Commodity Real Return Strategy Fund
has been a
105. Plaintiff PIMCO Funds: PIMCO Credit Absolute Return Fund is a business trust
existing under the laws of Massachusetts. PIMCO Funds: PIMCO Credit Absolute Return Fund
is a Certificateholder in the Trusts identified in Exhibit 1 attached hereto. PIMCO Funds:
PIMCO Credit Absolute Return Fund has been a Certificateholder of these Trusts at the time of
106. Plaintiff PIMCO Funds: PIMCO Diversified Income Fund is a business trust
existing under the laws of Massachusetts. PIMCO Funds: PIMCO Diversified Income Fund is a
Certificateholder in the Trusts identified in Exhibit 1 attached hereto. PIMCO Funds: PIMCO
Diversified Income Fund has been a Certificateholder of these Trusts at the time of the
-33-
107. Plaintiff PIMCO Funds: PIMCO Emerging Local Bond Fund is a business trust
existing under the laws of Massachusetts. PIMCO Funds: PIMCO Emerging Local Bond Fund
is a Certificateholder in the Trusts identified in Exhibit 1 attached hereto. PIMCO Funds:
PIMCO Emerging Local Bond Fund has been a Certificateholder of these Trusts at the time of
108. Plaintiff PIMCO Funds: PIMCO Emerging Markets Bond Fund is a business trust
existing under the laws of Massachusetts. PIMCO Funds: PIMCO Emerging Markets Bond
Fund is a Certificateholder in the Trusts identified in Exhibit 1 attached hereto. PIMCO Funds:
PIMCO Emerging Markets Bond Fund has been a Certificateholder of these Trusts at the time of
109. Plaintiff PIMCO Funds: PIMCO Emerging Markets Currency Fund is a business
trust existing under the laws of Massachusetts. PIMCO Funds: PIMCO Emerging Markets
Currency Fund is a Certificateholder in the Trusts identified in Exhibit 1 attached hereto.
PIMCO Funds: PIMCO Emerging Markets Currency Fund has been a Certificateholder of these
110. Plaintiff PIMCO Funds: PIMCO EMG Intl Low Volatility RAFI
-PLUS AR Fund
is a business trust existing under the laws of Massachusetts. PIMCO Funds: PIMCO EMG Intl
Low Volatility RAFI
-PLUS AR Fund is a Certificateholder in the Trusts identified in Exhibit 1

attached hereto. PIMCO Funds: PIMCO EMG Intl Low Volatility RAFI
-PLUS AR Fund has

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111. Plaintiff PIMCO Funds: PIMCO Extended Duration Fund is a business trust
existing under the laws of Massachusetts. PIMCO Funds: PIMCO Extended Duration Fund is a
Extended Duration Fund has been a Certificateholder of these Trusts at the time of the
112. Plaintiff PIMCO Funds: PIMCO Floating Income Fund is a business trust existing
under the laws of Massachusetts. PIMCO Funds: PIMCO Floating Income Fund is a
Floating Income Fund has been a Certificateholder of these Trusts at the time of the transactions
113. Plaintiff PIMCO Funds: PIMCO Foreign Bond Fund (U.S. Dollar-Hedged) is a
business trust existing under the laws of Massachusetts. PIMCO Funds: PIMCO Foreign Bond
Fund (U.S. Dollar-Hedged) is a Certificateholder in the Trusts identified in Exhibit 1 attached
hereto. PIMCO Foreign Bond Fund (U.S. Dollar-Hedged) has been a Certificateholder of these
114. Plaintiff PIMCO Funds: PIMCO Foreign Bond Fund (Unhedged) is a business
trust existing under the laws of Massachusetts. PIMCO Funds: PIMCO Foreign Bond Fund
(Unhedged) is a Certificateholder in the Trusts identified in Exhibit 1 attached hereto. PIMCO
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Funds: PIMCO Foreign Bond Fund (Unhedged) has been a Certificateholder of these Trusts at
115. Plaintiff PIMCO Funds: PIMCO Fundamental Advantage Absolute Return
PIMCO Fundamental Advantage Absolute Return Strategy Fund is a Certificateholder in the
Trusts identified in Exhibit 1 attached hereto. PIMCO Funds: PIMCO Fundamental Advantage
Absolute Return Strategy Fund has been a Certificateholder of these Trusts at the time of the
116. Plaintiff PIMCO Funds: PIMCO Fundamental IndexPLUS
AR Fund is a
business trust existing under the laws of Massachusetts. PIMCO Funds: PIMCO Fundamental
IndexPLUS
AR Fund is a Certificateholder in the Trusts identified in Exhibit 1 attached hereto.

PIMCO Funds: PIMCO Fundamental IndexPLUS
AR Fund has been a Certificateholder of

117. Plaintiff PIMCO Funds: PIMCO Global Advantage
Strategy Bond Fund is a

business trust existing under the laws of Massachusetts. PIMCO Funds: PIMCO Global
Advantage
Strategy Bond Fund is a Certificateholder in the Trusts identified in Exhibit 1

attached hereto. PIMCO Funds: PIMCO Global Advantage
Strategy Bond Fund has been a

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118. Plaintiff PIMCO Funds: PIMCO Global Bond Fund (U.S. Dollar-Hedged) is a
business trust existing under the laws of Massachusetts. PIMCO Funds: PIMCO Global Bond
Fund (U.S. Dollar-Hedged) is a Certificateholder in the Trusts identified in Exhibit 1 attached
hereto. PIMCO Funds: PIMCO Global Bond Fund (U.S. Dollar-Hedged) has been a
119. Plaintiff PIMCO Funds: PIMCO Global Bond Fund (Unhedged) is a business
trust existing under the laws of Massachusetts. PIMCO Funds: PIMCO Global Bond Fund
(Unhedged) is a Certificateholder in the Trusts identified in Exhibit 1 attached hereto. PIMCO
Funds: PIMCO Global Bond Fund (Unhedged) has been a Certificateholder of these Trusts at the
120. Plaintiff PIMCO Funds: PIMCO Global Multi-Asset Fund is a business trust
existing under the laws of Massachusetts. PIMCO Funds: PIMCO Global Multi-Asset Fund is a
Global Multi-Asset Fund has been a Certificateholder of these Trusts at the time of the
121. Plaintiff PIMCO Funds: PIMCO GNMA Fund is a business trust existing under
the laws of Massachusetts. PIMCO Funds: PIMCO GNMA Fund is a Certificateholder in the
Trusts identified in Exhibit 1 attached hereto. PIMCO Funds: PIMCO GNMA Fund has been a
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122. Plaintiff PIMCO Funds: PIMCO High Yield Fund is a business trust existing
under the laws of Massachusetts. PIMCO Funds: PIMCO High Yield Fund is a Certificateholder
in the Trusts identified in Exhibit 1 attached hereto. PIMCO Funds: PIMCO High Yield Fund
123. Plaintiff PIMCO Funds: PIMCO Income Fund is a business trust existing under
the laws of Massachusetts. PIMCO Funds: PIMCO Income Fund is a Certificateholder in the
Trusts identified in Exhibit 1 attached hereto. PIMCO Funds: PIMCO Income Fund has been a
124. Plaintiff PIMCO Funds: PIMCO Inflation Response Multi-Asset Fund is a
business trust existing under the laws of Massachusetts. PIMCO Funds: PIMCO Inflation
Response Multi-Asset Fund is a Certificateholder in the Trusts identified in Exhibit 1 attached
hereto. PIMCO Funds: PIMCO Inflation Response Multi-Asset Fund has been a
125. Plaintiff PIMCO Funds: PIMCO International StocksPLUS
AR Strategy Fund
(U.S. Dollar-Hedged) is a business trust existing under the laws of Massachusetts. PIMCO
-38-
Funds: PIMCO International StocksPLUS
AR Strategy Fund (U.S. Dollar-Hedged) is a

International StocksPLUS
AR Strategy Fund (U.S. Dollar-Hedged) has been a Certificateholder

13107.
126. Plaintiff PIMCO Funds: PIMCO International StocksPLUS
AR Strategy Fund
(Unhedged) is a business trust existing under the laws of Massachusetts. PIMCO Funds: PIMCO
International StocksPLUS
AR Strategy Fund (Unhedged) is a Certificateholder in the Trusts

identified in Exhibit 1 attached hereto. PIMCO Funds: PIMCO International StocksPLUS
AR
Strategy Fund (Unhedged) has been a Certificateholder of these Trusts at the time of the
127. Plaintiff PIMCO Funds: PIMCO Investment Grade Corporate Bond Fund is a
business trust existing under the laws of Massachusetts. PIMCO Funds: PIMCO Investment
Grade Corporate Bond Fund is a Certificateholder in the Trusts identified in Exhibit 1 attached
hereto. PIMCO Funds: PIMCO Investment Grade Corporate Bond Fund has been a
128. Plaintiff PIMCO Funds: PIMCO Long Duration Total Return Fund is a
Massachusetts business trust. Plaintiff PIMCO Funds: PIMCO Long Duration Total Return Fund
is a Certificateholder of the Trusts identified in Exhibit 1 attached hereto. PIMCO Funds:
-39-
PIMCO Long Duration Total Return Fund has been a Certificateholder of these Trusts at the time
of the transactions of which it complains, or its interests therein devolved upon it by operation of
129. Plaintiff PIMCO Funds: PIMCO Long-Term Credit Fund is a Massachusetts
business trust. PIMCO Funds: PIMCO Long-Term Credit Fund is a Certificateholder of the
Trusts identified in Exhibit 1 attached hereto. PIMCO Funds: PIMCO Long-Term Credit Fund
130. Plaintiff PIMCO Funds: PIMCO Long-Term U.S. Government Fund is a
Massachusetts business trust. PIMCO Funds: PIMCO Long-Term U.S. Government Fund is a
Certificateholder of the Trusts identified in Exhibit 1 attached hereto. PIMCO Funds: PIMCO
Long-Term U.S. Government Fund has been a Certificateholder of these Trusts at the time of the
131. Plaintiff PIMCO Funds: PIMCO Low Duration Fund is a Massachusetts business
trust. PIMCO Funds: PIMCO Low Duration Fund is a Certificateholder of the Trusts identified
in Exhibit 1 attached hereto. PIMCO Funds: PIMCO Low Duration Fund has been a
132. Plaintiff PIMCO Funds: PIMCO Low Duration Fund II is a Massachusetts
business trust. PIMCO Funds: PIMCO Low Duration Fund II is a Certificateholder of the Trusts
-40-
identified in Exhibit 1 attached hereto. PIMCO Funds: PIMCO Low Duration Fund II has been
a Certificateholder of these Trusts at the time of the transactions of which it complains, or its
133. Plaintiff PIMCO Funds: PIMCO Low Duration Fund III is a Massachusetts
business trust. PIMCO Funds: PIMCO Low Duration Fund III is a Certificateholder of the
Trusts identified in Exhibit 1 attached hereto. PIMCO Funds: PIMCO Low Duration Fund III
134. Plaintiff PIMCO Funds: PIMCO Moderate Duration Fund is a Massachusetts
business trust. PIMCO Funds: PIMCO Moderate Duration Fund is a Certificateholder of the
Trusts identified in Exhibit 1 attached hereto. PIMCO Funds: PIMCO Moderate Duration Fund
135. Plaintiff PIMCO Funds: PIMCO Mortgage Opportunities Fund is a Massachusetts
business trust. PIMCO Funds: PIMCO Mortgage Opportunities Fund is a Certificateholder of
the Trusts identified in Exhibit 1 attached hereto. PIMCO Funds: PIMCO Mortgage
Opportunities Fund has been a Certificateholder of these Trusts at the time of the transactions of
-41-
136. Plaintiff PIMCO Funds: PIMCO Mortgage-Backed Securities Fund is a
Massachusetts business trust. PIMCO Funds: PIMCO Mortgage-Backed Securities Fund is a
Mortgage-Backed Securities Fund has been a Certificateholder of these Trusts at the time of the
137. Plaintiff PIMCO Funds: PIMCO Real Return Asset Fund is a Massachusetts
business trust. PIMCO Funds: PIMCO Real Return Asset Fund is a Certificateholder of the
Trusts identified in Exhibit 1 attached hereto. PIMCO Funds: PIMCO Real Return Asset Fund
138. Plaintiff PIMCO Funds: PIMCO Real Return Fund is a Massachusetts business
trust. PIMCO Funds: PIMCO Real Return Fund is a Certificateholder of the Trusts identified in
Exhibit 1 attached hereto. PIMCO Funds: PIMCO Real Return Fund has been a
139. Plaintiff PIMCO Funds: PIMCO Real Estate Real Return Strategy Fund is a
Massachusetts business trust. PIMCO Funds: PIMCO Real Estate Real Return Strategy Fund is
a Certificateholder of the Trusts identified in Exhibit 1 attached hereto. PIMCO Funds: PIMCO
Real Estate Real Return Strategy Fund has been a Certificateholder of these Trusts at the time of
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140. Plaintiff PIMCO Funds: PIMCO Short-Term Fund is a Massachusetts business
trust. PIMCO Funds: PIMCO Short-Term Fund is a Certificateholder of the Trusts identified in
Exhibit 1 attached hereto. PIMCO Funds: PIMCO Short-Term Fund has been a Certificateholder
13107.
141. Plaintiff PIMCO Funds: PIMCO Small Cap StocksPLUS
AR Strategy Fund is a
Massachusetts business trust. PIMCO Funds: PIMCO Small Cap StocksPLUS
AR Strategy
Fund is a Certificateholder of the Trusts identified in Exhibit 1 attached hereto. PIMCO Funds:
PIMCO Small Cap StocksPLUS
AR Strategy Fund has been a Certificateholder of these Trusts

142. Plaintiff PIMCO Funds: PIMCO StocksPLUS
Absolute Return Fund is a

Massachusetts business trust. PIMCO Funds: PIMCO StocksPLUS
Absolute Return Fund is a

StocksPLUS
Absolute Return Fund has been a Certificateholder of these Trusts at the time of
AR Short Strategy Fund is a

AR Short Strategy Fund is

a Certificateholder of the Trusts identified in Exhibit 1 attached hereto. PIMCO Funds: PIMCO
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StocksPLUS
AR Short Strategy Fund has been a Certificateholder of these Trusts at the time of
Fund is a Massachusetts business

trust. PIMCO Funds: PIMCO StocksPLUS
Fund is a Certificateholder of the Trusts identified

in Exhibit 1 attached hereto. PIMCO Funds: PIMCO StocksPLUS
Fund has been a

Long Duration Fund is a

Long Duration Fund is a

StocksPLUS
Long Duration Fund has been a Certificateholder of these Trusts at the time of the
146. Plaintiff PIMCO Funds: PIMCO Total Return Fund is a Massachusetts business
trust. PIMCO Funds: PIMCO Total Return Fund is a Certificateholder of the Trusts identified in
Exhibit 1 attached hereto. PIMCO Funds: PIMCO Total Return Fund has been a
147. Plaintiff PIMCO Funds: PIMCO Total Return Fund II is a Massachusetts business
trust. PIMCO Funds: PIMCO Total Return Fund II is a Certificateholder of the Trusts identified
-44-
in Exhibit 1 attached hereto. PIMCO Funds: PIMCO Total Return Fund II has been a
148. Plaintiff PIMCO Funds: PIMCO Total Return Fund III is a Massachusetts
business trust. PIMCO Funds: PIMCO Total Return Fund III is a Certificateholder of the Trusts
identified in Exhibit 1 attached hereto. PIMCO Funds: PIMCO Total Return Fund III has been a
149. Plaintiff PIMCO Funds: PIMCO Total Return Fund IV is a Massachusetts
business trust. PIMCO Funds: PIMCO Total Return Fund IV is a Certificateholder of the Trusts
identified in Exhibit 1 attached hereto. PIMCO Funds: PIMCO Total Return Fund IV has been a
150. Plaintiff PIMCO Funds: PIMCO Unconstrained Bond Fund is a Massachusetts
business trust. PIMCO Funds: PIMCO Unconstrained Bond Fund is a Certificateholder of the
Trusts identified in Exhibit 1 attached hereto. PIMCO Funds: PIMCO Unconstrained Bond Fund
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151. Plaintiff PIMCO Funds: PIMCO Unconstrained Tax Managed Bond Fund is a
Massachusetts business trust. PIMCO Funds: PIMCO Unconstrained Tax Managed Bond Fund
is a Certificateholder of the Trusts identified in Exhibit 1 attached hereto. PIMCO Funds:
PIMCO Unconstrained Tax Managed Bond Fund has been a Certificateholder of these Trusts at
152. Plaintiff PIMCO Funds: PIMCO Worldwide Fundamental Advantage AR Strategy
Fund is a Massachusetts business trust. PIMCO Funds: PIMCO Worldwide Fundamental
Advantage AR Strategy Fund is a Certificateholder of the Trusts identified in Exhibit 1 attached
hereto. PIMCO Funds: PIMCO Worldwide Fundamental Advantage AR Strategy Fund has been
153. Plaintiff PIMCO Funds: Private Account Portfolio Series Asset-Backed Securities
Portfolio is a Massachusetts business trust. PIMCO Funds: Private Account Portfolio Series
Asset-Backed Securities Portfolio is a Certificateholder of the Trusts identified in Exhibit 1
attached hereto. PIMCO Funds: Private Account Portfolio Series Asset-Backed Securities
154. Plaintiff PIMCO Funds: Private Account Portfolio Series Developing Local
Markets Portfolio is a Massachusetts business trust. PIMCO Funds: Private Account Portfolio
Series Developing Local Markets Portfolio is a Certificateholder of the Trusts identified in
-46-
Exhibit 1 attached hereto. PIMCO Funds: Private Account Portfolio Series Developing Local
Markets Portfolio has been a Certificateholder of these Trusts at the time of the transactions of
155. Plaintiff PIMCO Funds: Private Account Portfolio Series Emerging Markets
Portfolio is a Massachusetts business trust. PIMCO Funds: Private Account Portfolio Series
Emerging Markets Portfolio is a Certificateholder of the Trusts identified in Exhibit 1 attached
hereto. PIMCO Funds: Private Account Portfolio Series Emerging Markets Portfolio has been a
156. Plaintiff PIMCO Funds: Private Account Portfolio Series High Yield Portfolio is a
Massachusetts business trust. Plaintiff PIMCO Funds: Private Account Portfolio Series High
Yield Portfolio is a Certificateholder of the Trusts identified in Exhibit 1 attached hereto.
Plaintiff PIMCO Funds: Private Account Portfolio Series High Yield Portfolio has been a
157. Plaintiff PIMCO Funds: Private Account Portfolio Series International Portfolio is
a Massachusetts business trust. PIMCO Funds: Private Account Portfolio Series International
Portfolio is a Certificateholder of the Trusts identified in Exhibit 1 attached hereto. PIMCO
Funds: Private Account Portfolio Series International Portfolio has been a Certificateholder of
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158. Plaintiff PIMCO Funds: Private Account Portfolio Series Long Duration
Corporate Bond Portfolio is a Massachusetts business trust. PIMCO Funds: Private Account
Portfolio Series Long Duration Corporate Bond Portfolio is a Certificateholder of the Trusts
identified in Exhibit 1 attached hereto. PIMCO Funds: Private Account Portfolio Series Long
Duration Corporate Bond Portfolio has been a Certificateholder of these Trusts at the time of the
159. Plaintiff PIMCO Funds: Private Account Portfolio Series Mortgage Portfolio is a
Massachusetts business trust. PIMCO Funds: Private Account Portfolio Series Mortgage
Portfolio is a Certificateholder of the Trusts identified in Exhibit 1 attached hereto. Plaintiff
PIMCO Funds: Private Account Portfolio Series Mortgage Portfolio has been a Certificateholder
13107.
160. Plaintiff PIMCO Funds: Private Account Portfolio Series Real Return Portfolio is
a Massachusetts business trust. PIMCO Funds: Private Account Portfolio Series Real Return
Funds: Private Account Portfolio Series Real Return Portfolio has been a Certificateholder of
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161. Plaintiff PIMCO Funds: Private Account Portfolio Series Short-Term Portfolio is
a Massachusetts business trust. PIMCO Funds: Private Account Portfolio Series Short-Term
Funds: Private Account Portfolio Series Short-Term Portfolio has been a Certificateholder of
162. Plaintiff PIMCO Funds: Private Account Portfolio Series U.S. Government Sector
Portfolio is a Massachusetts business trust. PIMCO Funds: Private Account Portfolio Series U.S.
Government Sector Portfolio is a Certificateholder of the Trusts identified in Exhibit 1 attached
hereto. PIMCO Funds: Private Account Portfolio Series U.S. Government Sector Portfolio has
163. Plaintiff PIMCO Global Advantage Strategy Bond Fund (Canada) is a trust
existing under the laws of Canada. PIMCO Global Advantage Strategy Bond Fund (Canada) is a
Certificateholder of the Trusts identified in Exhibit 1 attached hereto. PIMCO Global Advantage
Strategy Bond Fund (Canada) has been a Certificateholder of these Trusts at the time of the
164. Plaintiff PIMCO Global Credit Opportunity Master Fund LDC is a limited
duration company existing under the laws of theCayman Islands. PIMCO Global Credit
Opportunity Master Fund LDC is a Certificateholder of the Trusts identified in Exhibit 1 attached
hereto. PIMCO Global Credit Opportunity Master Fund LDC has been a Certificateholder of
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165. Plaintiff PIMCO Global Income Opportunities Fund is a trust existing under the
laws of Canada. PIMCO Global Income Opportunities Fund is a Certificateholder of the Trusts
identified in Exhibit 1 attached hereto. PIMCO Global Income Opportunities Fund has been a
166. Plaintiff PIMCO Global StocksPLUS & Income Fund is a Massachusetts business
trust. PIMCO Global StocksPLUS & Income Fund is a Certificateholder of the Trusts identified
in Exhibit 1 attached hereto. PIMCO Global StocksPLUS & Income Fund has been a
167. Plaintiff PIMCO High Income Fund is a Massachusetts business trust. Plaintiff
PIMCO High Income Fund is a Certificateholder of the Trusts identified in Exhibit 1 attached
hereto. PIMCO High Income Fund has been a Certificateholder of these Trusts at the time of
168. Plaintiff PIMCO Income Opportunity Fund is a Massachusetts business trust.
PIMCO Income Opportunity Fund is a Certificateholder of the Trusts identified in Exhibit 1
attached hereto. PIMCO Income Opportunity Fund has been a Certificateholder of these Trusts
-50-
169. Plaintiff PIMCO Income Strategy Fund is a Massachusetts business trust.
Plaintiff PIMCO Income Strategy Fund is a Certificateholder of the Trusts identified in Exhibit 1
attached hereto. PIMCO Income Strategy Fund has been a Certificateholder of these Trusts at
170. Plaintiff PIMCO Income Strategy Fund II is a Massachusetts business trust.
PIMCO Income Strategy Fund II is a Certificateholder of the Trusts identified in Exhibit 1
attached hereto. PIMCO Income Strategy Fund II has been a Certificateholder of these Trusts at
171. Plaintiff PIMCO Large Cap StocksPLUS Absolute Return Fund is a Delaware
business trust. PIMCO Large Cap StocksPLUS Absolute Return Fund is a Certificateholder of
the Trusts identified in Exhibit 1 attached hereto. PIMCO Large Cap StocksPLUS Absolute
Return Fund has been a Certificateholder of these Trusts at the time of the transactions of which
172. Plaintiff PIMCO Monthly Income Fund (Canada) is a trust exisiting under the
laws of Canada. PIMCO Monthly Income Fund (Canada) is a Certificateholder of the Trusts
identified in Exhibit 1 attached hereto. PIMCO Monthly Income Fund (Canada) has been a
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173. Plaintiff PIMCO Offshore Funds - PIMCO Absolute Return Strategy IV eFund is
a Cayman Islands business trust. PIMCO Offshore Funds - PIMCO Absolute Return Strategy IV
eFund is a Certificateholder of the Trusts identified in Exhibit 1 attached hereto. PIMCO
Offshore Funds - PIMCO Absolute Return Strategy IV eFund has been a Certificateholder of
174. Plaintiff PIMCO Offshore Funds: PIMCO Offshore Funds - PIMCO Absolute
Return Strategy V Alpha Fund is a Cayman Islands business trust. PIMCO Offshore Funds:
PIMCO Offshore Funds - PIMCO Absolute Return Strategy V Alpha Fund is a Certificateholder
of the Trusts identified in Exhibit 1 attached hereto. PIMCO Offshore Funds: PIMCO Offshore
Funds - PIMCO Absolute Return Strategy V Alpha Fund has been a Certificateholder of these
175. Plaintiff PIMCO Strategic Global Government Fund, Inc. is a corporation existing
under the laws of Maryland. PIMCO Strategic Global Government Fund, Inc. is a
Certificateholder of the Trusts identified in Exhibit 1 attached hereto. PIMCO Strategic Global
Government Fund, Inc. has been a Certificateholder of these Trusts at the time of the transactions
176. Plaintiff PIMCO Tactical Opportunities Master Fund Ltd. is a limited partnership
existing under the laws of the Cayman Islands. PIMCO Tactical Opportunities Master Fund Ltd.
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is a Certificateholder of the Trusts identified in Exhibit 1 attached hereto. PIMCO Tactical
Opportunities Master Fund Ltd. has been a Certificateholder of these Trusts at the time of the
177. Plaintiff PIMCO Variable Insurance Trust: PIMCO CommodityRealReturn
Strategy Portfolio is a Delaware business trust. PIMCO Variable Insurance Trust: PIMCO
CommodityRealReturn Strategy Portfolio is a Certificateholder of the Trusts identified in Exhibit
1 attached hereto. PIMCO Variable Insurance Trust: PIMCO CommodityRealReturn Strategy
178. Plaintiff PIMCO Variable Insurance Trust: PIMCO Emerging Markets Bond
Portfolio is a Delaware business trust. Plaintiff PIMCO Variable Insurance Trust: PIMCO
Emerging Markets Bond Portfolio is a Certificateholder of the Trusts identified in Exhibit 1
attached hereto. PIMCO Variable Insurance Trust: PIMCO Emerging Markets Bond Portfolio
179. Plaintiff PIMCO Variable Insurance Trust: PIMCO Foreign Bond Portfolio (U.S.
Dollar Hedged) is a Delaware business trust. PIMCO Variable Insurance Trust: PIMCO Foreign
Bond Portfolio (U.S. Dollar Hedged) is a Certificateholder of the Trusts identified in Exhibit 1
attached hereto. PIMCO Variable Insurance Trust: PIMCO Foreign Bond Portfolio (U.S. Dollar
Hedged) has been a Certificateholder of these Trusts at the time of the transactions of which it
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180. Plaintiff PIMCO Variable Insurance Trust: PIMCO Foreign Bond Portfolio
(Unhedged) is a Delaware business trust. PIMCO Variable Insurance Trust: PIMCO Foreign
Bond Portfolio (Unhedged) is a Certificateholder of the Trusts identified in Exhibit 1 attached
hereto. PIMCO Variable Insurance Trust: PIMCO Foreign Bond Portfolio (Unhedged) has been
181. Plaintiff PIMCO Variable Insurance Trust: PIMCO Global Advantage Strategy
Bond Portfolio is a Delaware business trust. PIMCO Variable Insurance Trust: PIMCO Global
Advantage Strategy Bond Portfolio is a Certificateholder of the Trusts identified in Exhibit 1
attached hereto. PIMCO Variable Insurance Trust: PIMCO Global Advantage Strategy Bond
182. Plaintiff PIMCO Variable Insurance Trust: PIMCO Global Bond Portfolio
(Unhedged) is a Delaware business trust. PIMCO Variable Insurance Trust: PIMCO Global
Bond Portfolio (Unhedged) is a Certificateholder of the Trusts identified in Exhibit 1 attached
hereto. PIMCO Variable Insurance Trust: PIMCO Global Bond Portfolio (Unhedged) has been a
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183. Plaintiff PIMCO Variable Insurance Trust: PIMCO High Yield Portfolio is a
Delaware business trust. PIMCO Variable Insurance Trust: PIMCO High Yield Portfolio is a
Certificateholder of the Trusts identified in Exhibit 1 attached hereto. PIMCO Variable
Insurance Trust: PIMCO High Yield Portfolio has been a Certificateholder of these Trusts at the
184. Plaintiff PIMCO Variable Insurance Trust: PIMCO Long Term U.S. Government
Portfolio is a Delaware business trust. Plaintiff PIMCO Variable Insurance Trust: PIMCO Long
Term U.S. Government Portfolio is a Certificateholder of the Trusts identified in Exhibit 1
attached hereto. PIMCO Variable Insurance Trust: PIMCO Long Term U.S. Government
185. Plaintiff PIMCO Variable Insurance Trust: PIMCO Low Duration Portfolio is a
Delaware business trust. PIMCO Variable Insurance Trust: PIMCO Low Duration Portfolio is a
Insurance Trust: PIMCO Low Duration Portfolio has been a Certificateholder of these Trusts at
186. Plaintiff PIMCO Variable Insurance Trust: PIMCO Real Return Portfolio is a
Delaware business trust. PIMCO Variable Insurance Trust: PIMCO Real Return Portfolio is a
Insurance Trust: PIMCO Real Return Portfolio has been a Certificateholder of these Trusts at the
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187. Plaintiff PIMCO Variable Insurance Trust: PIMCO Short-Term Portfolio is a
Delaware business trust. PIMCO Variable Insurance Trust: PIMCO Short-Term Portfolio is a
Insurance Trust: PIMCO Short-Term Portfolio has been a Certificateholder of these Trusts at the
188. Plaintiff PIMCO Variable Insurance Trust: PIMCO Total Return Portfolio is a
Delaware business trust. PIMCO Variable Insurance Trust: PIMCO Total Return Portfolio is a
Insurance Trust: PIMCO Total Return Portfolio has been a Certificateholder of these Trusts at
189. Plaintiff PIMCO Variable Insurance Trust: PIMCO Unconstrained Bond Portfolio
is a Delaware business trust. PIMCO Variable Insurance Trust: PIMCO Unconstrained Bond
Variable Insurance Trust: PIMCO Unconstrained Bond Portfolio has been a Certificateholder of
190. Plaintiff PIMCO Variable Insurance Trust: PIMCO Global Multi-Asset Managed
Allocation Portfolio is a Delaware business trust. PIMCO Variable Insurance Trust: PIMCO
Global Multi-Asset Managed Allocation Portfolio is a Certificateholder of the Trusts identified in
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Exhibit 1 attached hereto. PIMCO Variable Insurance Trust: PIMCO Global Multi-Asset
Managed Allocation Portfolio has been a Certificateholder of these Trusts at the time of the
191. Plaintiff PIMCO Variable Insurance Trust: PIMCO Global Multi-Asset Managed
Volatility Portfolio is a Delaware business trust. PIMCO Variable Insurance Trust: PIMCO
Global Multi-Asset Managed Volatility Portfolio is a Certificateholder of the Trusts identified in
Exhibit 1 attached hereto. PIMCO Variable Insurance Trust: PIMCO Global Multi-Asset
Managed Volatility Portfolio has been a Certificateholder of these Trusts at the time of the
192. Plaintiff Terlingua Fund 2, LP is a Delaware limited partnership. Terlingua Fund
2, LP is a Certificateholder of the Trusts identified in Exhibit 1 attached hereto. Terlingua Fund
2, LP has been a Certificateholder of these Trusts at the time of the transactions of which it
7. Prudential
193. The following plaintiffs are collectively referred to as Prudential.
194. Plaintiff Prudential Bank & Trust, FSB (PB&T), is a federally chartered bank
with its principal place of business at 280 Trumbull Street, Hartford, Connecticut 06103. PB&T
is a subsidiary of Prudential IBH Holdco., Inc., and ultimately Prudential Financial, Inc. PB&T
holds in trust on behalf of certain separately managed accounts certificates in the Trusts
identified in Exhibit 1 attached hereto. PB&T, through the separately managed accounts, has
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195. Plaintiff The Prudential Insurance Company of America (Prudential Insurance)
is an insurance company formed under the laws of, and domiciled in, the State of New Jersey,
with its principal place of business at 751 Broad Street, Newark, New Jersey 07102. Prudential
Insurance is a wholly owned subsidiary of Prudential Holdings, LLC, which is a Delaware
limited liability company. Prudential Holdings, LLC is a wholly owned subsidiary of Prudential
Financial, Inc. Prudential Insurance is a Certificateholder in the Trusts identified in Exhibit 1
attached hereto. Prudential Insurance has been a Certificateholder of these Trusts at the time of
196. Plaintiff The Prudential Investment Portfolios, Inc., is a Maryland Corporation
with a principal place of business at Gateway Center Three, 100 Mulberry Street, Newark, New
Jersey 07102. It is an open-end management investment company registered with the Securities
and Exchange Commission. It consists of six series, including the Prudential Asset Allocation
Fund. Prudential Investment Portfolios, Inc., through the Prudential Asset Allocation Fund, is a
Certificateholder of the Trusts identified in Exhibit 1 attached hereto. Prudential Investment
Portfolios, Inc., through the Prudential Asset Allocation Fund, has been a Certificateholder of
197. Plaintiff The Prudential Investment Portfolios 2 (PIP 2), formerly known as the
Dryden Investment Fund, is a Delaware statutory trust with a principal place of business in
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Newark, New Jersey. PIP2 is an open-ended management investment company registered with
the Securities and Exchange Commission. PIP 2 is comprised of two series funds, including the
Prudential Core Short-Term Bond Fund. PIP 2, through the Prudential Core Short-Term Bond
Fund, is a Certificateholder in the Trusts identified in Exhibit 1 attached hereto. PIP 2, through
the Prudential Core Short-Term Bond Fund, has been a Certificateholder of these Trusts at the
198. Plaintiff The Prudential Investment Portfolios 9 (PIP 9), formerly known as the
Dryden Large-Cap Core Equity, is a Delaware statutory trust with a principal place of business in
Newark, New Jersey. PIP 9 is an open-ended management investment company registered with
the Securities and Exchange Commission. PIP 9 is comprised of three series funds, including the
Prudential Absolute Return Bond Fund. PIP 9, through the Prudential Absolute Return Bond
Fund, is a Certificateholder in the Trusts identified in Exhibit 1 attached hereto. PIP 9, through
the Prudential Absolute Return Bond Fund, has been a Certificateholder of these Trusts at the
199. Plaintiff The Prudential Investment Portfolios, Inc. 17 (PIP 17), formerly
known as Prudential Total Return Bond Fund, Inc., is a Maryland Corporation with a principal
place of business in Newark, New Jersey. It is an open-ended management investment company
registered with the Securities and Exchange Commission. PIP 17 consists of two series funds:
the Prudential Short Duration Multi-Sector Bond Fund and Prudential Total Return Bond Fund.
PIP 17, through the Prudential Short Duration Multi-Sector Bond Fund and Prudential Total
Return Bond Fund, is a Certificateholder in the Trusts identified in Exhibit 1 attached hereto.
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PIP 17, through the Prudential Short Duration Multi-Sector Bond Fund and Prudential Total
Return Bond Fund, has been a Certificateholder of these Trusts at the time of the transactions of
200. Plaintiff The Prudential Series Fund (PSF), formerly known as The Prudential
Series Fund, Inc., is a Delaware statutory trust with a principal place of business in Newark, New
Jersey. It is an open-ended management investment company registered with the Securities and
Exchange Commission. It consists of eighteen series funds, including The Prudential Series
Fund-Conservative Balanced Portfolio, The Prudential Series Fund-Diversified Bond Portfolio,
The Prudential Series Fund-High Yield Portfolio and The Prudential Series Fund-Flexible
Managed Portfolio. PSF, through The Prudential Series Fund-Conservative Balanced Portfolio,
The Prudential Series Fund-Diversified Bond Portfolio, The Prudential Series Fund-High Yield
Portfolio and The Prudential Series Fund-Flexible Managed Portfolio, is a Certificateholder in
the Trusts identified in Exhibit 1 attached hereto. PSF, through The Prudential Series Fund-
Conservative Balanced Portfolio, The Prudential Series Fund-Diversified Bond Portfolio, The
Prudential Series Fund-High Yield Portfolio and The Prudential Series Fund-Flexible Managed
Portfolio, has been a Certificateholder of these Trusts at the time of the transactions of which it
201. Plaintiff Prudential Trust Company (PTC) is a corporation formed under the
laws of Pennsylvania, with its principal place of business in Scranton, Pennsylvania. PTC is a
wholly owned subsidiary of Prudential Investment Management, and ultimately Prudential
Financial, Inc. PTC serves as trustee for the Institutional Core Plus Bond Fund of the Prudential
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Company Master Commingled Investment Fund for Tax Exempt Trusts, the Institutional Core
Bond Fund of the Prudential Trust Company Master Commingled Investment Fund for Tax
Exempt Trusts, and the Prudential Merged Retirement Plan. PTC, through the Institutional Core
Plus Bond Fund of the Prudential Company Master Commingled Investment Fund for Tax
Exempt Trusts, the Institutional Core Bond Fund of the Prudential Trust Company Master
Commingled Investment Fund for Tax Exempt Trusts, and the Prudential Merged Retirement
Plan, is a Certificateholder in the Trusts identified in Exhibit 1 attached hereto. PTC, through the
Institutional Core Plus Bond Fund of the Prudential Company Master Commingled Investment
Fund for Tax Exempt Trusts, the Institutional Core Bond Fund of the Prudential Trust Company
Master Commingled Investment Fund for Tax Exempt Trusts, and the Prudential Merged
Retirement Plan has been a Certificateholder of these Trusts at the time of the transactions of
202. Plaintiff Prudential Retirement Insurance and Annuity Company (PRIAC) is an
insurance company formed under the laws of Connecticut, with its principal place of business in
Hartford, Connecticut. PRIAC is a wholly owned subsidiary of The Prudential Insurance
Company of America, which is owned by Prudential Holdings, LLC, and ultimately by
Prudential Financial, Inc. PRIAC established and maintains the following open-end,
commingled, insurance company separate accounts: Western Asset: Enhanced Cash, Western
Asset: Core Fixed Income, PIMCO: Investment Grade Fixed Income, Wellington: Investment
Grade Fixed Income, PIMCO: Medium Duration High Credit Bond, PIMCO: Lehman High
Credit Mortgage Index, PIMCO: Diversified Mortgage Index, Wellington: Medium Duration
High Credit Bond Fund, Balanced I / Wellington Mgmt. Fund, the Core Plus Bond Fund /
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REAMS Fund, Core Plus Bond Pimco Fund, Invesco - SAVRG529, North Carolina Fixed
Income Fund - JP Morgan Chase, Union Carbide I and PIMCO International Bond (collectively,
Separate Accounts). PRIAC, both individually and through the Separate Accounts, is a
Certificateholder in the Trusts identified in Exhibit 1 attached hereto. PRIAC, both individually
and through the Separate Accounts, has been a Certificateholder of these Trusts at the time of the
203. Plaintiff The Gibraltar Life Insurance Co., Ltd. (Gibraltar) is a life insurance
company formed under the laws of Japan, with its principal place of business at Prudential Tower
2-13-10, Nagatacho, Chiyoda-ku, Tokyo, Japan 100-0014. Gibraltar is a wholly owned
subsidiary of Prudential Holdings of Japan, Inc., and ultimately Prudential Financial, Inc.
Gibraltar is a Certificateholder in the Trusts identified in Exhibit 1 attached hereto. Gibraltar has
8. Sealink
204. Plaintiff Sealink is a is a company incorporated under the laws of Ireland with the
registered address of Sealink Funding Limited, Fourth Floor, 3 Georges Dock, IFSC, Dublin 1,
Ireland. Sealink is a Certificateholder in the Trusts identified in Exhibit 1 attached hereto.
Sealink has been a Certificateholder of these Trusts at the time of the transactions of which it
9. TIAA
205. The following plaintiffs are collectively referred to as TIAA.
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206. Plaintiff TIAA-CREF Life Insurance Company is a direct wholly-owned
subsidiary of Teachers Life Insurance and Annuity Association of America, a legal reserve life
insurance company established under the insurance laws of the State of New York. Through its
separate accounts (General Pension Act.; TIAA Stable Value; TIAA-CREF Life Ins. GFA;
General Acct PA; T-C Life Ins. PA; TIAA Stable Return Annuity), TIAA-CREF Life Insurance
Company is a Certificateholder in the Trusts identified in Exhibit 1 attached hereto. TIAA-
CREF Life Insurance Company, through its managed accounts, has been a certificateholder of
207. Plaintiff TIAA-CREF Bond Plus Fund is a Delaware mutual fund with its
principal place of business in the State of New York. TIAA-CREF Bond Plus Fund is a
Certificateholder in the Trusts identified in Exhibit 1 attached hereto. TIAA-CREF Bond Plus
Fund has been a certificateholder of these Trusts at the time of the transactions of which it
208. Plaintiff TIAA-CREF Short-Term Bond Fund is a Delaware mutual fund with its
principal place of business in the State of New York. TIAA-CREF Short-Term Bond Fund is a
Certificateholder in the Trusts identified in Exhibit 1 attached hereto. TIAA-CREF Short-Term
Bond Fund has been a certificateholder of these Trusts at the time of the transactions of which it
209. Plaintiff TIAA-CREF Bond Fund is a Delaware mutual fund with its principal
place of business in the State of New York. TIAA-CREF Bond Fund is a Certificateholder in the
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Trusts identified in Exhibit 1 attached hereto. TIAA-CREF Bond Fund has been a
Law 13-107.
210. Plaintiff TIAA Global Public Investments, MBS LLC, a wholly owned subsidiary
of TIAA-CREF Life Insurance Company, is a Delaware limited liability company with its
principal place of business in the State of New York. TIAA Global Public Investments, MBS
LLC is a Certificateholder in the Trusts identified in Exhibit 1 attached hereto. TIAA Global
Public Investments, MBS LLC has been a certificateholder of these Trusts at the time of the
transactions of which it complaints, or interests therein devolved upon it by operation of law in
accordance with New York General Obligations Law 13-107.
211. Plaintiff CREF Bond Market Account is a Delaware mutual fund with its principal
place of business in the State of New York. CREF Bond Market Account is a Certificateholder
in the Trusts identified in Exhibit 1 attached hereto. CREF Bond Market Account has been a
Law 13-107.
212. Plaintiff CREF Social Choice Account is a New York investment company with
its principal place of business in the State of New York. CREF Social Choice Account is a
Certificateholder in the Trusts identified in Exhibit 1 attached hereto. CREF Social Choice
Account has been a certificateholder of these Trusts at the time of the transactions of which it
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213. Plaintiff TIAA-CREF Life Bond Fund is a Delaware mutual fund with its
principal place of business in the State of New York. TIAA-CREF Life Bond Fund is a
Certificateholder in the Trusts identified in Exhibit 1 attached hereto. TIAA-CREF Life Bond
Fund has been a certificateholder of these Trusts at the time of the transactions of which it
214. Plaintiff TIAA-CREF Social Choice Bond Fund is a Delaware mutual fund with
its principal place of business in the State of New York. TIAA-CREF Social Choice Bond Fund
is a Certificateholder in the Trusts identified in Exhibit 1 attached hereto. TIAA-CREF Social
Choice Bond Fund has been a certificateholder of these Trusts at the time of the transactions of
which it complaints, or interests therein devolved upon it by operation of law in accordance with
New York General Obligations Law 13-107.
B. Defendants
1. U.S. Bank National Association
215. Defendant U.S. Bank is a national banking association organized and existing
under the laws of the United States. U.S. Banks principal place of business and principal place
of trust administration is located in Minneapolis, Minnesota. As of December 31, 2013, U.S.
Banks corporate parent, U.S. Bancorp., was the fifth largest commercial bank in the United
States based on assets and the fourth largest in total branches. U.S. Bank is U.S. Bancorps
second largest subsidiary. U.S. Bank does business in and maintains offices in New York,
including a corporate trust office at 100 Wall Street, New York, New York 10005.
216. U.S. Bank, together with its affiliates, is involved in all aspects of the private-
label RMBS market. U.S. Bank currently administers as trustee more than $3 trillion in assets,
including RMBS, operating 50 corporate trust offices across the country. U.S. Bank currently
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serves as trustee for thousands of RMBS trusts with assets of over $1 trillion in original face
value and is trustee for approximately 30% of all RMBS issued between 2004 and 2007.
217. Additionally, U.S. Bank, together with its subsidiary, U.S. Bank Home Mortgage,
Inc., serve as Master Servicers of residential mortgage loans, performing master servicing
functions in two locations: Bloomington, Minnesota and Chicago, Illinois. U.S. Banks master
servicing portfolio includes approximately 45,700 loans with an unpaid principal balance of
approximately $6 billion as of January 2014.
218. U.S. Bank Home Mortgage, Inc. has acted as a mortgage loan seller, selling over
$400 million of loans in RMBS deals issued between 2004 and 2007.
2. The Nominal Defendant Trusts
219. Each Trust is named herein as a nominal defendant. Each of the Trusts is a New
York common law trust established under its respective PSA, or a Delaware statutory trust
established under its respective Indenture and Sale Servicing Agreement (SSA). All of the
Trusts are governed by the substantive laws of the state of New York, and are subject to the Trust
Indenture Act of 1939 (15 U.S.C. 77aaa, et seq.) (TIA).
3

III. OVERVIEW OF THE TRUSTS
220. The Trusts in this action, identified in the attached Exhibit 1, are 841 New York
common law trusts, or Delaware statutory trusts, resulting from non-agency residential
mortgage-backed securitizations issued between 2004 and 2008, inclusive. The Trusts have a

3
The Trusts governing agreements set forth U.S. Banks duties as trustee. Over 90% of the
Trusts are governed by an agreement styled as a PSA and certain related agreements that the
PSA references and incorporates. The remaining Trusts are governed by a document styled as an
Indenture and certain related agreements that the Indenture references and incorporates,
including the Sales and Servicing Agreement. All of the governing agreements are substantially
similar, and impose the same duties on U.S. Bank as Trustee to the Trusts and
Certificateholders. Accordingly, this Complaint primarily refers to the PSAs when discussing
the Trustees contractual obligations.
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total original principal balance of approximately $771 billion, and a current principal balance of
approximately $172 billion as of June 1, 2014. To date, the Trusts have suffered total realized
collateral losses of $92.4 billion. Moreover, as a result of defective mortgage collateral and
servicer violations, the Trusts have incurred and will incur substantial losses.
221. The Trusts have a high concentration of loans originated by six lenders;
specifically, Wells Fargo Bank (Wells Fargo) (and affiliates), Washington Mutual Bank
(WaMu) (and related affiliates), Countrywide Home Loans (Countrywide) (and affiliates),
GreenPoint Mortgage (GreenPoint), First Franklin Financial Corporation (First Franklin),
and New Century Mortgage Corp. (New Century). These lenders collectively originated
nearly $300 billion in loans, representing approximately 44% of the total original face value of
the mortgage loans in the Trusts.
222. A significant portion of the Trusts were sponsored by eleven entities. Specifically,
$565 billion in loans were sold to the Trusts by Lehman, Credit Suisse, WaMu, Goldman Sachs,
Banc of America, UBS, Merrill Lynch, Bear Stearns, RBS, C-BASS and Morgan Stanley,
representing approximately 73% of the total original face value of the mortgage loans in the
Trusts.
223. An overwhelming majority of the Trusts loans are serviced by three entities.
Specifically, $516 billion in loans are serviced by Wells Fargo, Aurora Loan Services, Inc.
(Aurora), and JPMorgan, representing approximately 66% of the total original face value of
the mortgage loans in the Trusts.
IV. JURISDICTION AND VENUE
224. This Court has jurisdiction over this proceeding pursuant to CPLR Section 301
because Defendant U.S. Bank maintains offices and regularly conducts business in New York.
This Court also has jurisdiction pursuant to CPLR Section 302 because U.S. Bank, by engaging
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in the conduct alleged herein, transacted business within this state and committed tortious acts
within this state. Further, the contracts at issue were, on information and belief, performed by
Defendant U.S. Bank in New York and the Trusts were formed under New York law and/or
contain a New York choice-of-law provision. Additionally, Section 22(a) of the Securities Act,
15 U.S.C. 77v(a), confers jurisdiction on this Court as to Plaintiffs claims under the TIA and
provides that, subject to exceptions not applicable here, no case arising under this title and
brought in any State court of competent jurisdiction shall be removed to any court of the United
States.
225. Venue is proper in this Court under CPLR Section 503(a) because one or more of
the parties reside in New York County and Plaintiffs designate New York County as the place of
trial for this action. Venue is proper in the Court under CPLR Section 503(b) because U.S. Bank,
a Trustee, is deemed a resident of New York County by virtue of its appointment as trustee of
trusts formed under New York law.
V. PRESUIT DEMAND ON U.S. BANK IS
NOT REQUIRED AND WOULD ALSO BE FUTILE
226. The no action clauses in the Governing Agreements do not apply to this lawsuit
because the claims at issue are brought against U.S. Bank in its capacity as Trustee, not against a
third party. The PSAs expressly permit suits against the trustee, stating that no provision of the
agreements shall be construed to relieve the Trustee . . . from liability for its own negligent
action, its own negligent failure to act, or its own willful misconduct.
227. Additionally, under the TIA and New York law, no action clauses do not apply
to this action, which is brought derivatively on behalf of the Trusts, against the Trustee, U.S.
Bank, for its own wrongdoing. U.S. Bank is not being asked to initiate a suit in its own name as
trustee to enforce rights and obligations under the Governing Agreements. Rather, this action
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asserts claims against U.S. Bank for breaching its contractual, statutory, and common law
obligations and for acting with negligence when performing its duties. Because this is not an
action, suit or proceeding that U.S. Bank is capable of bringing in its own name as Trustee under
the Governing Agreements, the no action clause does not apply.
228. Compliance with the no action clauses pre-suit requirements also would have
been futile. The no action clause (if it applied) would require Plaintiffs to demand that U.S.
Bank initiate proceedings against itself and to indemnify U.S. Bank for its own liability to the
Trusts, an absurd requirement that the parties did not intend. See Cruden v. Bank of New York,
957 F.2d 961, 968 (2d Cir. 1992).
229. Plaintiffs have the right to bring this suit derivatively on behalf of the Trusts under
New York Business Corporation Law Section 626. This suit should be brought derivatively
because, as described herein, the Trusts have suffered injury as a result of U.S. Banks breach of
its contractual, statutory and common law duties to the Trusts.
VI. BACKGROUND - THE TRUSTEES ROLE
AS GATEKEEPER IN THE SECURITIZATION PROCESS
230. RMBS provide investors with an interest in the income generated by one or more
designated pools of residential mortgages. The actual securities themselves represent an interest
in an issuing trust that holds the designated mortgage pools. The corpus of the trust like the
Trusts at issue here consists entirely of the underlying mortgage loans.
231. The TIA requires that a trustee be appointed for all bond issues over $10 million
so that the rights of investors are not compromised. In an RMBS transaction, the issuer
appoints the trustee, which is the only independent party to the PSAs. Accordingly, the trustee
serves the critical role of an independent party with access to all relevant information, including
the mortgage loan files. Investors reasonably understand that the trustee is under an affirmative
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duty to take action to protect the interests of the trusts and their beneficiaries, the
Certificateholders. As part of the RMBS transaction, the trustee is assigned all right, title and
interest in the underlying mortgage loans. The PSAs require the trustee, or its agent, to take
physical possession of the mortgage loans, ensure that each mortgage loan was properly
conveyed and certify that the documentation for each loan was accurate and complete.
232. The trustee is contractually responsible for the transactions of the issuing trust.
The trustee is responsible for administering the trust for the benefit of investors, including
guaranteeing that the transactions are administered in accordance with the related documentation,
following compliance and performance-related matters and handling cash and information
processing for the investors. The trustee must work closely with the issuer and servicer to
protect the welfare of the trust. In contrast to the roles of issuer or servicer, which can be
combined, the trustees sole purpose is to represent the investor and, therefore, the trustee must
be an independent entity without any conflicts-of-interest. The PSAs contractually obligate the
trustee to oversee and manage the servicer, including granting the trustee the power to replace the
service for its failure to act in accordance with the servicers contractual obligations.
233. Although the structure and underlying collateral of the mortgages may vary from
trust to trust, RMBS trusts all function similarly: the cash flow from interest and principal
payments is passed through to the trust and distributed to Certificateholders in the order laid out
in the securitization agreements, commonly referred to as the cash-flow waterfall. The duties
and responsibilities of the trustee are identical in all RMBS transactions namely to represent
the trusts and their investors as an independent third party. Between 2003 and 2009, private label
RMBS offerings totaled more than $3 trillion. Yet, only a handful of major American financial
institutions served as RMBS trustees and contractually agreed to perform the vitally important
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gatekeeping functions to protect Certificateholders. Among this handful of major RMBS
trustees, U.S. Bank held the second largest market share during this period.

234. U.S. Bank is currently the largest RMBS trustee in the United States. In
December 2010, U.S. Bank completed its acquisition of Bank of America National Associations
(BANA) securitization trust business. In turn, BANA was, by merger in 2008, the successor-
in-interest to LaSalle National Association (LaSalle), which was the original trustee for certain
Trusts.
4
U.S. Bank succeeded BANA as trustee of these and other trusts when it acquired
BANAs securitization trust business in 2010. U.S. Bank, however, recognized the enormous
trustee liability imposed under the PSAs as successor to BANA and LaSalle and expressly

4
As set forth in Section 8.08 of the PSAs, the duties of the original trustee pass to any successor
trustee: Any successor trustee appointed . . . shall become fully vested with all the rights,
powers, duties and obligations of its predecessor hereunder, with like effect as if originally
named as Trustee or Delaware Trustee herein.
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attempted to avoid assuming such liability in its transaction with BANA. Despite its knowledge
of the pervasive breaches of representations and warranties, U.S. Bank put its own interests
ahead of the Trusts and the Certificateholders by attempting to contract out of successor liability
while doing nothing to pursue valuable claims against the predecessor trustees and other
responsible parties.
235. The process of securitizing mortgages into RMBS involves a number of steps,
each of which is critical to finalize the securitization and sell the RMBS to investors. First, a
sponsor creates a loan pool from mortgages it originated and purchased from other financial
institutions. The sponsor has the right to require the seller to repurchase or replace loans that do
not meet represented quality standards after purchasing a mortgage pool.
236. Second, the sponsor transfers the loans to a depositor, which segments the cash
flows and risks in the loan pool among different levels of investment or tranches. Generally,
cash flows from the loan pool are applied in order of seniority, going first to the most senior
tranches. In addition, any losses to the loan pool due to defaults, delinquencies, foreclosure or
otherwise, are applied in reverse order of seniority, and are generally applied first to the most
junior tranches.
237. Third, the depositor transfers the mortgage pool to the issuing trust so that it can
be used as collateral for RMBS that will be issued and sold to investors. The depositor then
passes the RMBS to the underwriters, for sale to investors in exchange for payment.
238. The servicer is appointed by the sponsor and is a party to the PSAs. The servicer
is often an affiliate of the sponsor or an originator of a substantial portion of the loans in the
trust. The servicer collects payments from the underlying borrowers. After collection, the
servicer sends the funds to the trustee, which then makes payments to the Certificateholders.
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Mortgage defaults reduce the available principal and interest payments to be paid to the trust and
passed through to investors. Mortgage delinquencies similarly reduce the available principal and
interest to be paid to the trust and distributed to investors.
239. Accordingly, if an underlying borrower does not timely make the required
payments to the servicer, the servicer may have to take action to mitigate or minimize the losses
to the trust, including foreclosing on the property and providing property maintenance to
maximize the return on the investment to the trust and its beneficial owners the
Certificateholders. Foreclosures result in higher losses to the trust (and therefore to the RMBS
investors) if the value of the collateral is lower than anticipated. For these reasons, proper loan
origination and underwriting of the mortgages underlying the RMBS, and proper and timely loan
servicing and oversight are essential to the quality of the RMBS and the timely receipt of
principal and interest payments to the trust for distribution to the Certificateholders.
VII. U.S. BANKS CONTRACTUAL OBLIGATIONS
240. The Trusts rights and U.S. Banks contractual duties, as Trustee for the Trusts at
issue in this action are set forth in the relevant securitization agreements, including the Mortgage
Loan Purchase and Sale Agreements (MLPAs) (or similar documents) and the Governing
Agreements.
241. The contractual provisions relevant to this action are substantially similar, if not
identical, in all of the Governing Agreements and impose substantially the same, if not identical,
duties and obligations on the parties to the Governing Agreements.
A. The Mortgage Loan Purchase And Sale Agreement
242. The MLPA is a contract between either the originator and the sponsor, or the
sponsor and the depositor. The MLPA governs the terms of the sale of the mortgage loans
acquired for securitization. In its capacity as seller under the MLPA, the originator or sponsor
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makes extensive representations and warranties concerning the characteristics, quality, and risk
profile of the mortgage loans.
243. The sellers typical representations and warranties in the MLPAs include, inter
alia, the following: (i) the information in the mortgage loan schedule is true and correct in all
material respects; (ii) each loan complies in all material respects with all applicable local, state
and federal laws and regulations at the time it was made; (iii) the mortgaged properties are
lawfully occupied as the principal residences of the borrowers unless specifically identified
otherwise; (iv) the borrower for each loan is in good standing and not in default; (v) no loan has
a LTV ratio of more than 100%; (vi) each mortgaged property was the subject of a valid
appraisal; and (vii) each loan was originated in accordance with the underwriting guidelines of
the related originator. To the extent mortgages breach the sellers representations and warranties,
the mortgage loans are worth less and are much riskier than represented.
244. Under the MLPAs, upon discovery or receipt of notice of any breach of the
sellers representations and warranties that has a material and adverse effect on the value of the
mortgage loans in the Trusts or the interests of the Certificateholders therein, the seller is
obligated to cure the breach in all material respects. The MLPAs do not specify what constitutes
discovery of a breach or what evidence must be presented to the seller in providing notice of a
breach.
245. If a breach is not cured within a specified period of time, the seller is obligated to
either substitute the defective loan with a loan of adequate credit quality, or repurchase the
defective loan at a specified purchase price (the Repurchase Price) equal to the outstanding
principal balance and all accrued but unpaid interest on the loan to be paid to the Trust. For
breaches related to a mortgage loan or acquired property already sold from the Trust (for
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example, as a result of foreclosure), the seller must pay to the Trust the amount of the
Repurchase Price that exceeds the net liquidation proceeds received upon the sale of the
mortgage loan or acquired property.
246. The repurchase provisions ensure that the Trust need not continue to hold
mortgage loans for which the seller breached its representations and warranties. Thus, the
repurchase provisions transfer from the Trusts to the sellers the risk of any decline, or further
decline, in the value of those mortgage loans.
247. Under the MLPAs, the demanding party must merely show that the breach has a
material and adverse effect on the value of the mortgage loans in the Trusts or the interests of the
Certificateholders in the loans. The sellers cure, substitute and repurchase obligations do not
require any showing that the sellers breach of representations caused any realized loss in the
related mortgage loan in the form of default or foreclosure, or that the demanding party prove
reliance on servicing and origination documents.
248. Upon the sale of the mortgage loans to the Trust, the rights under MLPAs,
including the sellers representations and warranties concerning the mortgage loans, were
assigned to U.S. Bank, as Trustee for the benefit of the Trust and all the Certificateholders, in
accordance with the PSAs.
B. The Pooling And Servicing Agreements
249. The PSAs are contracts between, among others, the depositor, the servicer, and
U.S. Bank, as Trustee, which govern the Trusts that issued certificates. The PSAs for each of the
Trusts are substantially similar and memorialize (i) the transfer and conveyance of the mortgage
loans from the depositor to the Trust; (ii) the Trusts issuance of beneficial certificates of interests
in the Trusts to raise the funds to pay the depositor for the mortgage loans; and (iii) the terms of
those certificates.
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1. U.S. Banks Duties And Obligations Under The PSAs
250. The PSAs set forth U.S. Banks contractual duties and obligations, which are
identical or substantially identical for each Trust governed by a PSA. Specifically, each of the
PSAs require U.S. Bank to oversee and enforce the sellers and the servicers obligations. In
performing these contractual obligations, U.S. Bank is required to act in the best interests of and
for the protection of the Trusts and their Certificateholders. Certificateholders, unlike the trustee,
have no direct contact with the sellers and servicers and have no ability to influence or examine
the servicers decisions. Moreover, under the PSAs, Certificateholders do not have the right to
directly enforce the sellers representations and warranties or the servicers duties, absent
satisfaction of the collective action provisions. Thus, Certificateholders must rely on U.S. Bank
to protect their interests.
251. The PSAs require the depositor to deliver to and deposit with, or cause to be
delivered to and deposited with, U.S. Bank, the mortgage files, which must at all times be
identified in the records of U.S. Bank as being held by or on behalf of the Trust. Furthermore,
the PSAs require U.S. Bank to acknowledge receipt of the mortgage files on behalf of the Trust
and to acknowledge that all mortgage pool assets, mortgage files and related documents and
property held by it at any time are held by it as trustee of the Trust.
252. Once the mortgage files are in U.S. Banks possession, the PSAs require U.S.
Bank to ensure that the underlying mortgage loans were properly conveyed to the Trusts, and that
the Trusts have perfected enforceable title to the mortgage loans by reviewing the mortgage files
for each of the mortgage loans. U.S. Bank is required to review each mortgage file within a
certain time period after the Closing Date and deliver to the depositor a certification that all
documents required have been executed and received.
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253. If U.S. Bank identifies any defect in a mortgage loan file for an underlying
mortgage loan contained in a Trust, U.S. Bank must promptly notify either the servicer or
depositor, and that party shall promptly notify the applicable seller of the defect and take
appropriate steps on behalf of the Trust to enforce such sellers obligation to correct or cure the
defect or repurchase or substitute such mortgage loan.
a) Duty To Provide Notice Of
Breaches And To Enforce Putback Rights
254. Under the PSAs, U.S. Bank is entrusted to ensure that mortgage loans in the
Trusts were properly underwritten, were of a certain risk profile, and had characteristics of a
certain quality as represented by the sellers in the MLPAs. The Trusts were assigned all of the
rights under the MLPAs pertaining to the mortgage loans, including the right to put back loans
that breached the sellers representations and warranties.
255. To protect the Trusts and all Certificateholders, the PSAs require U.S. Bank to
give prompt written notice to all parties to the PSA upon its discovery of a breach of a
representation or warranty made by the seller in respect of the mortgage loans that materially and
adversely affects the value of any mortgage loan or the interests of the Certificateholders in any
loan, and to take such action as may be necessary or appropriate to enforce the rights of the
Trusts with respect to the breach.
b) U.S. Banks Duties Regarding The Servicers
256. Under the PSAs, U.S. Bank, as Trustee, has certain duties and obligations with
respect to monitoring the servicers, whose authority and responsibilities are delegated by U.S.
Bank. In particular, the PSAs set forth U.S. Banks obligations upon occurrence of an Event of
Default, which is defined as a specified failure of the servicer to perform its servicing duties and
cure this failure within a specified time period. The PSAs identify several types of failures by
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the servicer that may give rise to an Event of Default. Such failures include, breach of servicer
representations and warranties and failure to observe or perform in any material respect any other
covenants or agreements, which continues unremedied for no more than thirty to sixty days after
written notice of such failure shall have been given to the servicer by the trustee requiring the
same to be remedied, or knowledge of such failure by a Servicing Officer of the servicer,
whichever is earlier.
257. The remedies for uncured servicer Events of Default include termination of the
servicer and reimbursement for trust assets lost as a result of the servicers violations. As
detailed herein, U.S. Bank did not perform its duties to monitor the servicers and did not initiate
any action against the servicers for the benefit of the Trusts and Certificateholders.
c) Duties Upon Knowledge Of An Event Of Default
258. The PSAs impose additional obligations upon U.S. Bank once a responsible
officer of U.S. Bank has knowledge of the occurrence of an Event of Default. First, U.S. Bank
must give written notice to the relevant servicer of the occurrence of such an event within the
specified time period after U.S. Bank obtains knowledge of the occurrence. Second, within sixty
to ninety days after the occurrence of any Event of Default, U.S. Bank is required to provide
written notice to all Certificateholders of the Event of Default, unless the Event of Default has
been cured or waived. Third, and most importantly, the PSAs require U.S. Bank to exercise the
rights and powers vested in it by the PSA using the same degree of care and skill . . . as a
prudent person would exercise or use under the circumstances in the conduct of such persons
own affairs.
259. U.S. Banks failure to give notice to the servicers of an Event of Default does not
prevent the triggering of an Event of Default should U.S. Banks failure result from its own
negligence or willful misconduct
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2. The Servicers Duties And
Obligations Under The PSAs
260. The PSAs also establish the servicers duties and obligations to the Trusts and all
Certificateholders. In essence, the servicers contractual role is to manage the mortgage loans for
the benefit of the Trust and its Certificateholders.
a) Duty To Provide Notice Of
Breaches And To Enforce Putback Rights
261. The PSAs require the servicers to notify all parties to the PSAs if the servicers
discover a breach of any of the sellers representations and warranties that adversely and
materially affects the value of the mortgage loan or the interests of the Trusts. The PSAs
generally require the servicers, on behalf of the Trusts, to enforce the sellers obligation to
repurchase, substitute, or cure such defective mortgage loans or mortgage loan files.
262. The servicers are greatly disincentivized to enforce these contractual duties
related to the sellers repurchase obligations. The servicer is selected by the sponsor, and
therefore risks losing future business and becoming adverse to the seller if it vigilantly enforces
the sellers repurchase obligations. Additionally, the servicers often are affiliates of the sellers
because in connection with the sale of a loan pool, the seller typically retains the loan servicing
rights for its own servicing division. In addition, due to the fact that the servicers affiliates, in
their capacity as sellers, likewise sold loans in breach of specific representations and warranties
to other RMBS Trusts and face similar repurchase liability, the servicers were disincentivized
from enforcing these contractual duties.
263. Consequently, it is crucial that the trustee monitor the servicer to ensure that the
servicer is enforcing the Trusts repurchase rights against the sellers so that the Trusts hold
mortgage loans of the same credit quality and characteristics as bargained for. Moreover, where
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the servicers fail to enforce the Trusts repurchase rights, the trustee must step in and exercise the
Trusts rights.
b) Duty To Perform Prudent And
Customary Servicing Practices
264. The PSAs require the servicers to service and administer the mortgage loans for
and on behalf of the Trusts and the Certificateholders (i) in the same manner in which they
service and administer similar mortgage loans for their own portfolio or for other third parties,
giving due consideration to customary and usual standards of practice of prudent institutional
mortgage lenders servicing similar loans, (ii) with a view to maximizing the recoveries with
respect to such mortgage loans on a net present value basis, and (iii) without regard to, among
other things, the right of the servicers to receive compensation or other fees for its services under
the PSA, the obligation of the servicers to make servicing advances under the PSA, and the
servicers ownership, servicing or management for others of any other mortgage loans.
265. In truth, the servicers financial interests in managing the Trusts loans often
diverge from those of the Trusts. Servicers typically pay upfront for mortgage servicing rights.
To make a profit, servicers must recoup their outlay based on their net servicing income (i.e.,
gross servicing income minus servicing costs). The amount of servicers compensation in the
form of servicing fees, float, and retained interests varies based on factors beyond the servicers
control, particularly mortgage prepayment speeds, which are largely a function of interest rates.
Accordingly, a servicers ability to maximize its net servicing income depends in large part on its
ability to levy ancillary fees and to control servicing costs. For this reason, servicers are
incentivized to aggressively pursue ancillary fees and to pursue loss mitigation strategies that
minimize costs, even if they are inconsistent with or contrary to the interests of the Trusts and
the Certificateholders.
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266. Accordingly, it is essential that trustees monitor servicers servicing activities to
ensure that servicers: (i) maintain accurate and adequate loan and collateral files so as not to
prejudice the interests of the Trusts and the Certificateholders in the mortgages by fostering
uncertainty as to the timely recovery of collateral; and (ii) avoid incur unnecessary servicing fees
to maintain mortgaged property.
c) Duty To Perform Prudent Foreclosure Practices
267. The PSAs require the servicers to use their best efforts, consistent with accepted
servicing practices, to foreclose upon or otherwise comparably convert the ownership of
properties securing the mortgage loans as they come into and continue in default and as to which
no satisfactory arrangements can be made for collection of delinquent payments. Moreover, the
PSAs contemplate that foreclosures and liquidations of defaulted mortgages will proceed
forthwith and in accordance with applicable law, provided the documentation is in order, as a
matter of fairness to all parties.
268. In truth, the servicers financial interests in managing loans often diverge from
those of the Trusts. For example, to minimize the costs of foreclosures, servicers from 2007
through 2010 pervasively cut corners in the discharge of their servicing duties at the expense of
the accuracy, reliability and currency of loan documents and information.
269. Thus, it is essential that trustees monitor servicers activities subsequent to
borrower defaults to ensure the servicers function in a way that maximizes value for the Trusts
and the Certificateholders.
d) Duty To Perform Prudent Servicing Advances
270. The PSAs provide that the servicers may recover servicing advances. Servicers
are required to advance monthly P&I and taxes and insurance payments on delinquent loans.
Servicers also advance legal fees, maintenance, and preservation costs on properties that have
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already been foreclosed and become wholly owned by the Trust (or REO), rather than sold to a
third party. Servicers are able to recover these advances from the net proceeds of the property
when sold.
271. Under the PSAs, the servicers advancing obligations are subject to a deemed
non-recoverability standard where the servicer has the right to curtail additional advances based
on a reasonable analysis that the servicer could not otherwise recover its advances based on
projected, probable net liquidation proceeds. Thus, if a servicer believes that the P&I advances
will exceed the net proceeds of a foreclosure on the mortgaged property, the servicer generally
has the right to cease making the P&I advances and to look to the rest of the Trusts loan pool for
recovery of any excess paid. This means that servicers P&I advances are functionally the most
senior claim on the Trusts and the servicers get paid first before any certificateholder. As
explained by Ocwen Financial Corporation (Ocwen), a major subprime servicer: Most of our
advances have the highest reimbursement priority (i.e., they are on top of the waterfall) so that
we are entitled to repayment [from loan proceeds] before any interest or principal is paid on the
bonds.
5
In the majority of cases, the servicer may recover advances in excess of loan proceeds
from pool-level proceeds. Additionally, under the PSAs, the servicers are only entitled to recoup
customary, reasonable and necessary out-of-pocket costs and expenses incurred in the
performance by the servicer of its servicing obligations.
272. In practice, servicers are incentivized to abuse their advancing obligations by
incurring unnecessary or inflated expenses related to delinquent loans because those advances
are the senior-most claims on the Trusts and will almost always be recoverable.

5
Ocwen, Annual Report (Form 10-K) at 40 (Mar. 13, 2008), available at
http://www.sec.gov/Archives/edgar/data/873860/000101905608000419/ocn_10k07.htm.
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273. Thus, it is critical that trustees monitor the servicers and, in particular, servicing
advances to ensure servicers do not manipulate the recoverable and reasonable and necessary
designations to their own advantage and to the Trusts detriment.
C. The Indentures And Sale Servicing Agreements
274. Indentures and Sale Servicing Agreements govern the minority of Trusts that
issued mortgage-backed notes. The Indentures are contracts between, among others, the Trust, as
issuer, and U.S. Bank, as Trustee. In this agreement, the issuer (i.e. the trust) pledges the
mortgage loan assets of the trust to U.S. Bank, the Indenture Trustee. U.S. Bank accepts the
pledge of the mortgage loans and holds the assets of the Trust in trust for the Noteholders. The
Trust, in turn, issues the notes to investors.
275. The Indentures set forth duties on the part of the Trust as issuer. Such duties,
which must be punctually performed and observed, include taking all action necessary or
advisable to cause the Trust or the Indenture Trustee to: (i) enforce any of the rights to the
mortgage loans; and (ii) preserve or defend title to the Trust Estate and the rights of the Indenture
Trustee and the Noteholders in such Trust Estate against the claims of all persons and parties.
276. The Indentures set forth U.S. Banks contractual duties and obligations, which are
substantially similar if not identical to U.S. Banks contractual duties and obligations in the
PSAs. For example, as pledgee of the mortgage loans, U.S. Bank, as Indenture Trustee, has the
benefit of the representations and warranties made by the sellers in the MLPAs. If a responsible
officer of U.S. Bank has actual knowledge of any breach of representation or warranty made by
the Seller in the MLPA, U.S. Bank shall promptly notify the Seller of the breach and the Sellers
obligation to cure such defect or repurchase or substitute for the related mortgage loan.
277. Like the PSAs, the Indentures impose similar obligations on the trustee following
an Event of Default. However, pursuant to the Indenture, only the conduct of the issuer, the
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Trust, can constitute an Event of Default. An Event of Default occurs under the Indenture, when,
among other things, a default occurs in the observance or performance of any covenant or
agreement of the Trust made in the Indenture, and such default is not cured within a specified
period of time after notice is given to the Trust by U.S. Bank or to the Trust and U.S. Bank by a
requisite number of Noteholders. The Indentures define a default as [a]ny occurrence which
is or with notice or the lapse of time or both would become an Event of Default.
278. Once U.S. Bank has actual knowledge of an Event of Default, U.S. Bank must
enforce the rights of the Noteholders, whether for the specific performance of any covenant,
agreement or right under the Indenture, or to enforce any other proper remedy or legal or
equitable right vested by law. In carrying out these post-Event of Default duties, U.S. Bank must
exercise its rights and obligations under the Indenture using the same degree of care and skill as
a prudent person would, under the circumstances, in the conduct of his or her own affairs.
279. The SSAs are contracts between, among others, the depositor, the trust (typically
a Delaware statutory trust), as issuer, U.S. Bank, as Indenture Trustee, and the master servicer.
The SSAs contain substantially similar if not identical provisions to the PSAs. Like the PSAs,
the SSAs call for the depositors conveyance of mortgage loans to the Trust in which the notes
participate and establish the rights and obligations of the master servicer for the notes.
280. Like the PSAs, the SSAs for each of the Trusts are substantially similar and
provide for nearly identical obligations on the part of master servicers with respect to servicing
the mortgage loans, including covenants (i) to provide notice of seller breaches; (ii) to administer
the Mortgage Loans consistently with industry practice, (iii) to use reasonable efforts to collect
all payments owed on the Mortgage Loans, including with respect to foreclosure, and to follow
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the same collection procedures it follows for servicing mortgage loans in its own portfolio, and
(iv) to make proper servicing advances.
281. The SSAs also define Master Servicer Events of Default, which include a
failure to observe or perform material covenants and agreements set forth in the SSA to be
performed by the master servicer, which materially affects the rights of the Noteholders, and
such failure continues unremedied for a specified period after written notice was given. If a
Servicer Event of Default occurs under the SSA which a responsible officer of U.S. Bank, as
Indenture Trustee, has received written notice or has actual knowledge of, U.S. Bank must
immediately terminate the Master Servicer and either substitute in as master servicer or find a
successor. U.S. Bank must also give prompt written notice to all Noteholders of Servicer Event
of Defaults.
VIII. THE TRUSTS SUFFERED FROM PERVASIVE BREACHES OF
REPRESENTATIONS AND WARRANTIES BY THE SELLERS
282. Each of the Trusts loan pools contained high percentage of loans that materially
breached the sellers representations and warranties, which adversely affected the value of those
mortgage loans and the Trusts and Certificateholders rights in those mortgage loans.
Specifically, the representations and warranties regarding the originators compliance with
underwriting standards and practices, owner occupancy statistics, appraisal procedures, LTV and
CLTV ratios were systemically and pervasively false. The falsity of these representations and
omissions is demonstrated by the high default rates of the mortgage loans, the plummeting credit
ratings of the RMBS and certificates, the results of investors forensic reviews and re-
underwriting of loans within the Trusts in other litigation, and evidence highlighting the
originators abandonment of underwriting standards.
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A. High Default Rates of the Mortgage
Loans And Plummeting Credit Ratings
Are Indicative Of Massive Seller Breaches
283. The extremely high default rates of the mortgage loans within the Trusts and the
decline in the credit ratings of the RMBS to below investment grade are strong evidence of the
originators misrepresentation of the credit quality and characteristics of the mortgage loans they
sold to the Trusts.
284. The Trusts have experienced payment problems significantly beyond what was
expected for loan pools that were properly underwritten, and which contained loans that actually
had the characteristics originators represented and warranted. For example, as of January 1,
2009, over 23.6% of the relevant mortgage loans across all 841 of the Trusts have been written
off for a loss or were delinquent. Within certain RMBS sponsor labels, such as the Lehman-label
Trusts, over 37% of the relevant Mortgage Loans had been written off for a loss or were
delinquent. Moreover, an astounding 25% or more of the relevant mortgage loans have been
written off for a loss or were delinquent in over 300 of the individual Trusts. Further, 179 of the
Trusts have delinquency rates of above 40% for the mortgage loans remaining in the Trusts.
285. Not only have the mortgage loans experienced extraordinary rates of delinquency
and default, but the ratings of the RMBS supported by them have significantly
deteriorated. Because of the high delinquency, foreclosure, and default rates of the underlying
mortgage loans, more than 80% of all certificates within the Trusts have been downgraded.
286. The economic downturn cannot explain the abnormally high percentage of
defaults, foreclosures, and delinquencies observed in the loan pools ultimately backing the
Certificates. Loan pools that were properly underwritten and containing loans with the
represented characteristics would have experienced substantially fewer payment problems and
substantially lower percentages of defaults, foreclosures, and delinquencies. The significant
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rating downgrades experienced by the RMBS are also strong evidence that they were improperly
underwritten, and that they did not have the credit risk characteristics the sellers represented and
warranted.
B. The Systemic Disregard Of Underwriting
Standards Was Pervasive During The Relevant Period
287. During the height of the mortgage and securitization boom in the U.S. market
between 2004 and 2008, originators of residential mortgage loans sold and securitized loans in
RMBS in violation of their stated underwriting guidelines and in breach of the representations
and warranties provided to the purchasers of the loan pools.
288. Government reports and investigations and newspaper reports have uncovered the
extent of pervasive abandonment of underwriting standards. The Permanent Subcommittee on
Investigations in the United States Senate (PSI) released a report detailing the causes of the
financial crisis. Using WaMu as a case study, the PSI concluded through its investigation:
Washington Mutual was far from the only lender that sold poor quality mortgages
and mortgage backed securities that undermined U.S. financial markets. The
Subcommittee investigation indicates that Washington Mutual was emblematic of
a host of financial institutions that knowingly originated, sold, and securitized
billions of dollars in high risk, poor quality home loans. These lenders were not
the victims of the financial crisis; the high risk loans they issued became the fuel
that ignited the financial crisis.
6

289. The Financial Crisis Inquiry Commission (FCIC) issued its final report in
January 2011 that detailed, among other things, the collapse of mortgage underwriting standards
and subsequent collapse of the mortgage market and wider economy.
7
The FCIC Report
concluded that there was a systemic breakdown in accountability and ethics. Unfortunately

6
Wall Street And The Financial Crisis: Anatomy Of A Financial Collapse, United States Senate
Permanent Subcomm. On Investigations, 112th

Cong. 50 (2011).
7
Final Report Of The National Commission Of The Causes Of The Financial And Economic
Crisis In The United States, Fin. Crisis Inquiry Commn (FCIC Report) (2011).
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as has been the case in past speculative booms and busts we witnessed an erosion of standards
of responsibility and ethics that exacerbated the financial crisis. Id. at xxii. The FCIC found:
[I]t was the collapse of the housing bubble fueled by low interest rates, easy and
available credit, scant regulation, and toxic mortgages that was the spark that
ignited a string of events, which led to a full-blown crises in the fall of 2008.
Trillions of dollars in risky mortgages had become embedded throughout the
financial system, as mortgage-related securities were packaged, repackaged, and
sold to investors around the world.

Id. at xvi.
290. During the housing boom, mortgage lenders focused on quantity rather than
quality, originating loans for borrowers who had no realistic capacity to repay the loan. The
FCIC Report found that the percentage of borrowers who defaulted on their mortgages within
just a matter of months after taking a loan nearly doubled from the summer of 2006 to late
2007. Id. at xxii. Early Payment Default is a significant indicator of pervasive disregard for
underwriting standards. The FCIC Report noted that mortgage fraud flourished in an
environment of collapsing lending standards... Id.
C. There Is Evidence Of Widespread Breaches Of
Representations And Warranties By The Specific
Originators That Sold Loans To The Trusts
291. Much like other RMBS trusts of the same vintage, the Trusts have been materially
and adversely impacted by the loan origination industrys rampant underwriting failures. The
originators systemic and pervasive sale to the Trusts of residential mortgage loans in breach of
representations and warranties is confirmed through several federal and state government
investigations and published reports, well publicized news reports, and public and private
enforcement actions that have described rampant underwriting failures throughout the period in
which the Trusts were created and, more specifically, failures by the same originators whose
mortgage loans were sold to the Trusts.
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292. A summary of testimonial and documentary evidence as to each of the major
originators of the mortgage loans to the Trusts is set forth below.
1. Wells Fargo
293. Wells Fargo originated approximately $91.8 billion of residential mortgage loans
sold the Trusts, representing approximately 13.5% of all of the Trusts mortgage loan collateral.
Wells Fargos origination practices have been the subject of numerous governmental
investigations and reports and private RMBS lawsuits. For example, the report of the FCIC
Report revealed, for the first time, findings in a confidential 2005 peer group study conducted
by examiners from the Federal Reserve and other agencies of mortgage practices at six
companies, including Wells Fargo. Notably, the study observed a very rapid increase in the
volume of [] irresponsible loans, very risky loans by Wells Fargo and these five other lenders,
and that a large percentage of their loans issued were subprime and Alt-A mortgages, and the
underwriting standards for these products had deteriorated. FCIC Report at 172. The FCIC
Report further revealed for the first time that the Federal Home Loan Mortgage Corporation
(Freddie Mac) put back $1.2 billion in ineligible mortgage loans to Wells Fargo during 2009
and 2010, while the Federal National Mortgage Association (Fannie Mae) put back $2.3 billion
ineligible mortgage loans to Wells Fargo from 2007 through 2010. Id. at 225.
294. Wells Fargo systemic violations of representations and warranties regarding the
credit quality of the loans it originated have been the subject of several highly publicized RMBS
lawsuits. For instance, in General Retirement Sstem of the City of Detroit v. The Wells Fargo
Mortgage Backed Securities 2006-AR18 Trust et al., No. 09-cv-1376 (N.D. Cal. Mar. 27, 2009),
the court found that the private investor plaintiffs had adequately pled that variance from the
stated [underwriting] standards was essentially [Wells Fargos] norm and that this conduct
infected the entire underwriting process. In re Wells Fargo Mortgage-Backed Certificates
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Litig., 712 F. Supp. 2d 958, 971-72 (N.D. Cal. 2010). In 2011, Wells Fargo agreed to pay $125
million to settle the litigation. The FDIC made similar allegations in FDIC v. Chase Mortgage
Finance Corp., et al., No. 12-cv-6166 (S.D.N.Y. Aug. 10, 2012), contending that Wells Fargo
and other originators overstated the values of properties such that virtually every representation
about the LTV ratios of the loans was untrue or misleading in CMSI 2006-6, CMALT 2007-A3
and CMALT 2007-A5, three of the Trusts at issue here.
295. The results of loan file reviews conducted by investors have further confirmed
Wells Fargos abandonment of their underwriting standards and pervasive and systemic breach of
material representations and warranties regarding quality and characteristics of the loans it
originated. For example, in FHFA v. Citigroup Inc., et al., the FHFA reviewed 1,851 loan files in
the CMLTI 2006-WF1 and CMLTI 2006-WF2 securitizations. Wells Fargo originated all of the
loans in these two trusts. The FHFA found that a stunning 79% of the reviewed mortgage loans
in these securitizations were not underwritten in accordance with the underwriting guidelines or
otherwise breached the representations contained in the transaction documents. FHFA v.
Citigroup Inc., et al., No. 11-cv-6196 (S.D.N.Y June 28, 2012). Amended Compl. 136.
296. In addition, there is ample public evidence of Wells Fargos failure to originate
loans in compliance with federal and state law. For example, on July 20, 2011, the Federal
Reserve announced that it had levied a record $85 million fine against Wells Fargo for pushing
borrowers with good credit into expensive subprime mortgages and falsifying loan applications.
Similarly, in late 2012, the U.S. Attorney for the Southern District of New York claimed that
Wells Fargo engaged in a longstanding and reckless trifecta of deficient training, deficient
underwriting and deficient disclosure, all while relying on the convenient backstop of
government insurance. Manhattan U.S. Attorney Files Mortgage Fraud Lawsuits Against Wells
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Fargo Bank, N.A. Seeking Hundreds of Millions of Dollars in Damages for Fraudulently
Certified Loans, U.S. Attorneys Office Southern District of New York (Oct. 9, 2012).
2. WaMu and Long Beach
297. WaMu, together with its affiliate Long Beach Mortgage Co. (Long Beach),
originated approximately $79.5 billion of the loans included in the Trusts. WaMu was ranked as
the third worst mortgage originator by the Office of the Comptroller of the Currencys (OCC)
Worst Ten in the Worst Ten list based on 2005-2007 originations as of March 29, 2009.
298. WaMus abandonment of its represented underwriting practices and systemic
origination of defective loans during the same time period as the WaMu loans securitized in the
Trusts were detailed in the FCIC Report and the U.S. Senate Permanent Subcommittee on
Investigations April 13, 2011 bipartisan report on the financial crisis, Wall Street and the
Financial Crisis: Anatomy of a Financial Collapse, issued under Chairman Carl Levin and
Ranking Minority Member Tom Coburn (Senate Report). The FCIC Report concluded that
firms, including WaMu, originated a vast number of high-risk, nontraditional mortgages that
were in some cases deceptive, in many cases confusing, and often beyond borrowers ability to
repay. FCIC Report at 418. WaMu also conducted a post mortem review of 213 Long Beach
loans that experienced first-payment defaults in March, April, and May 2005, which found that
many early defaults were not only preventable, but that in some instances fraud should have
been easily detected from the presence of White Out on an application of a borrower having
two different signatures. Senate Report at 78.
299. According to the Senate Report, WaMu and Long Beach turned increasingly to
higher-risk loans over a four-year period, increasing their subprime loans from nearly $4.5
billion in 2003, to $29 billion in 2006. Id. at 2-3. WaMu and Long Beach violated their own
lending standards; allowed excessive loan-error and exception rates; exercised weak oversight
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over the third-party mortgage brokers who supplied half or more of their loans; and tolerated the
issuance of loans with fraudulent or erroneous borrower information. Id. at 3. Moreover, WaMu
and Long Beach securitized not just poor-quality loans, but also loans that its own personnel
had flagged as containing fraudulent information. Id. at 125. Finally, in September 2008,
WaMus Corporate Credit Review team released a report which found that internal controls
intended to prevent the sale of fraudulent loans to investors were ineffective and that of the 25
loans tested, 11 reflected a sale date after the completion of the investigation which confirmed
fraud. Id. In other words, even loans marked with a red flag indicating fraud were being sold to
investors.
300. WaMus poor underwriting practices and defective loans have been the subject of
numerous well-publicized lawsuits brought by government agencies. For example, in March
2011, the FDIC accused WaMu executives of reckless lending before the 2008 collapse of what
was the nations largest savings bank. The FDIC settled the action for $64 million in December
2011. See Ex-Bank Executives Settle F.D.I.C. Lawsuit, N.Y. Times (Dec. 13, 2011). Similarly, the
FHFA sued J.P. Morgan Chase (J.P. Morgan), which had acquired WaMu in September 2011,
alleging that J.P. Morgan and WaMu had misled Fannie Mae and Freddie Mac about the quality
of nearly 129 securities for which they paid about $33 billion. J.P. Morgan settled the FHFA case
in October 2013 for $4 billion, including approximately $1.2 billion relating to claims against
WaMu. See J.P. Morgan Settles With FHFA, Wall St. J. (Oct. 25, 2013).
301. WaMus acquiror, J.P. Morgan, also entered into a $13 billion settlement with the
National Credit Union Administration (NCUA) and U.S. Department of Justice (DOJ) over
sales of defective RMBS. As part of the settlement, the NCUA received $1.4 billion for losses
incurred by corporate credit unions as a result of purchases of the toxic securities. The NCUAs
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pre-settlement investigation found that of the 187 loans sampled by WaMus internal review in
late 2007: (i) 31 percent had appraisal discrepancies that raised concerns that the value was not
supported; (ii) 47 percent exceeded program parameters in place at the time of approval; (iii) 70
percent were identified with red flags that were not addressed by the business unit; (iv) 71
percent were stated-income loans that were identified for lack of reasonableness of income; and
(v) 71 percent had credit-evaluation or loan-decision errors. See Natl Credit Union Admin. Bd.
v. Credit Suisse Sec. (USA) LLC, et. al., No. 13-cv-6736 (S.D.N.Y. Sept. 23, 2013) Compl. 204.
302. WaMus improper lending practices were also detailed in a highly publicized class
action lawsuit brought by RMBS investors. See In re Washington Mutual, Inc. Sec., Derivative &
ERISA Litig., No. 08-md-1919 (W.D. Wash. July 23, 2010). In 2011, The Wall Street Journal
reported that WaMu agreed to settle the class-action lawsuit for $208.5 million. See WaMu
Settles Lawsuit, To Pay $208.5 Million, Wall St. J. (July 2, 2011).
303. In August 2009, Deutsche Bank, as the trustee for 99 Trusts in which WaMu sold,
sponsored, and serviced loans, sued the FDIC (as the receiver for WaMu) on behalf of the Trusts
and the investors in the related RMBS seeking to enforce the Trusts and investors rights.
Deutsche Banks complaint detailed WaMus systemically deficient origination practices and
pervasive sale of mortgage loans that failed to comply with WaMus representations and
warranties between 2004 and 2008. See Deutsche Bank Natl Trust Co. v. FDIC, No. 1:09-cv-
01656 (D.D.C. Aug. 26, 2009).
3. Countrywide
304. Countrywide is among the largest originators of mortgage loans underlying the
Trusts at issue originating approximately $57 billion in mortgage loans. It is beyond dispute
that Countrywide was one of the most notorious and worst loan originators from 2004 through
2008, routinely abandoning all underwriting standards and requirements while pumping
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hundreds of billions of dollars of toxic loans into the U.S. RMBS securitization market. Indeed,
the OCC List ranked Countrywide the fourth worst mortgage originator as of March 29, 2009,
and blamed the lender for 10,254 foreclosures in the worst 10 metro areas based on 2005-2007
originations.
305. Countrywides abandonment of its underwriting standards and deplorable
origination practices have been exposed by highly publicized government investigations and
reports. For example, the FCIC Report noted that as early as September 2004, Countrywide
executives recognized that many of the loans they were originating could result in catastrophic
consequences. Less than a year later, they noted that certain high-risk loans they were making
could result not only in foreclosures but also in financial and reputational catastrophe for the
firm. But they did not stop. FCIC Report at xxii. The Countrywide executives concerns
regarding its defective loan pools came to full fruition. The FCIC Report states that in January
2011, Bank of America reached a deal with Fannie Mae and Freddie Mac, settling claims relating
to ineligible Countrywide-originated loans with a payment of more than $2.5 billion. And, from
2007 through 2010, Fannie Mae put back $6.9 billion in loans to Bank of America, despite the
fact that its random sample review of 2% to 5% of the loan pools revealed higher rates for
delinquent loans. See FCIC Report at 225.
306. The U.S. Senate Investigations Subcommittees April 13, 2011 report on the
financial crisis Wall Street And The Financial Crisis: Anatomy of a Financial Collapse, issued
under the chairmanship of Senators Carl Levin and Tom Coburn (Senate Report) similarly
addressed Countrywides systemic violations of underwriting guidelines resulting in billions of
dollars of defective loans originated during the same time period as the Countrywide loans
securitized in the Trusts. For example, the Senate Report disclosed that after reviewing certain
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loans purchased from Countrywide, Goldman Sachs personnel found that about 50% of the loans
reviewed were candidates for return to the lender. Senate Report at 487.
307. Countrywides origination practices have also been the focus of regulatory
enforcement actions. For example, on June 4, 2009, the Securities Exchange Commission
(SEC) filed an enforcement action against the three most senior Countrywide executives,
including Chief Executive Officer Angelo Mozilo (Mozilo), charging them with fraudulently
misleading investors by representing that Countrywide had issued loans primarily to prime or
low risk borrowers, when it had actually originated increasingly risky loans that senior
executives knew would result in substantial defaults and delinquencies. The investigation and
enforcement action uncovered telling evidence regarding the quality and characteristics of
Countrywide-originated loans. For example, in a March 28, 2006 email sent by Mozilo to
Countrywides President David Sambol and others, Mozilo stated that Countrywides 100% LTV
(also known as 80/20) subprime product is the most dangerous product in existence and there
can be nothing more toxic . . . On October 15, 2010, the SEC announced that Mozilo would
pay a then record $22.5 million penalty to settle the SEC charges.
308. Countrywide-originated loans have been the subject of numerous putback
demands as a result of pervasive and systemic breaches of representations and warranties. As of
October 2010, Bank of America, which acquired Countrywide in January 2008, had received
more repurchase requests than any other bank, due almost exclusively to Countrywides
systematic abandonment of sound underwriting practices. Likewise, on June 29, 2011, Bank of
America announced an $8.5 billion settlement with trustee The Bank of New York Mellon,
resolving, among other things, all claims that Countrywide violated the representations and
warranties when it sold loans pertaining to over 530 RMBS trusts put the world, including U.S.
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Bank, on notice of the magnitude of Countrywides fraudulent conduct. In January 2014, New
York Supreme Court Justice Barbara Kapnick partially approved the settlement, resolving
putback claims for 530 Countrywide RMBS trusts.
309. Loan file reviews of Countrywide-originated loans sold to RMBS trusts during
the period 2004 through 2008, conducted by monoline insurers provide additional evidence of
Countrywides pervasive and systemic breaches of representations and warranties. For example,
Syncora, an insurance company that insured Countrywides securitizations, conducted a re-
review analysis of defaulted loans in the securitizations that it insured to determine whether the
loans had been originated in accordance with Countrywides representations. Syncora found that
75% of the loans it reviewed were underwritten in violation of Countrywides own lending
guidelines, lack any compensating factors that could justify their increased risk, and should
never have been made. Similarly, monoline insurer MBIAs re-underwriting review of
Countrywide securitizations during this period revealed that almost 90% of defaulted or
delinquent loans in the Countrywide securitizations showed material discrepancies from
underwriting guidelines, such as lack of key documentation, invalid or incomplete appraisals,
fraud on the face of the loan applications and misrepresentations regarding borrower income,
FICO score, debt to income ratio and CLTV ratios.
310. Forensic reviews conducted in other litigation of Countrywide-originated loans
sold to many of the Trusts at issue have corrobated the monoline insurers findings. In In re
Countrywide Financial Corp. Mortgage-Backed Securities Litigation, No. 11-ml-02265 (C.D.
Cal. Aug. 30, 2011), plaintiffs review of 188 Countrywide-originated loans from SARM 2006-
10, one of the Trusts at issue here, revealed violations of underwriting guidelines in over 90% of
the loans, including blatant misrepresentations of employment, and breaches of guidelines.
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Similarly, plaintiffs review of SASC 2006-BC4, a securitization containing a large percentage of
Countrywide originated loans, revealed that Countrywide falsely represented the number of
owner-occupied properties in the Trust by over 17 percentage points.
4. GreenPoint
311. GreenPoint is another prolific originator of mortgage loans sold to the Trusts
originating approximately $25 billion in mortgage loans. GreenPoint systematically disregarded
its underwriting standards, granted exceptions in the absence of compensating factors, required
less documentation, and granted no documentation or limited-documentation loans to individuals
without sound credit histories. Indeed, in November 2008, Business Week Magazine reported
that GreenPoints employees and independent mortgage brokers targeted borrowers who were
less able to afford the loan payments they were required to make, and many had no realistic
ability to pay back the loans. Likewise, GreenPoint was identified 7th worst in Stockton,
California, and 9th worst in both Sacramento, California, and Las Vegas, Nevada. In the 2009
Worst Ten in the Worst Ten Report, GreenPoint was listed as 3rd worst in Modesto, California,
4th worst in Stockton, Merced, and Vallejo-Fairfield-Napa, California, 6th worst in Las Vegas,
Nevada, and 9th worst in Reno, Nevada.
312. Loan file reviews of GreenPoint-originated loans sold to RMBS trusts during the
period 2004 through 2008, conducted by monoline insurers and RMBS trustees have confirmed
GreenPoints pervasive breach of mortgage loan representations and warranties. Monoline
insurer MBIAs forensic review of loan files pertaining to a Bear Stearns securitization primarily
containing GreenPoint-originated mortgage loans revealed a breach rate of 88%. In a similar
action against GreenPoint, monoline insurer CIFG Assurance North America, Inc. reviewed 110
loans and found that 90 (or 82%) of the loans failed to comply with one or more of the
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representations and warranties. See CIFG Assurance N. Am., Inc. v. GreenPoint Mortg. Funding,
Inc., Index No. 653449/2012 (N.Y. Sup. Ct. Mar. 4, 2013) Compl. 38.
313. Similarly alarming breach rates in securitizations containing GreenPoint-
originated mortgage loans have been confirmed in RMBS trustee putback lawsuits. For
example, in U.S. Bank Natl Assn v. GreenPoint Mortgage Funding, Inc., Index No.
600352/2009 (N.Y. Sup. Ct. Apr. 22, 2009), a consultants investigation concluded that 93% of
the loans that GreenPoint sold contained errors, omissions, misrepresentations, and negligence
related to origination and underwriting. The investigation found that GreenPoint loans suffered
from serious defects including pervasive breaches of representations and warranties concerning
credit scores debt-to-income and/or LTV ratios, and the borrowers intent to occupy the
mortgaged property.
5. First Franklin
314. First Franklin, a subsidiary of Merrill Lynch & Co. (Merrill Lynch) (which was
purchased by Bank of America), is among the Trusts largest mortgage loan sellers. First
Franklin originated approximately $25 billion in mortgage loans included in the Trusts at issue
here. First Franklin also sponsored over $22 billion in mortgage loans included in sixteen Trusts,
which were 100% originated by First Franklin. First Franklin Trusts have performed poorly by
any measure. To date, the First Franklin-label Trusts have suffered collateral losses of over $6
billion, representing over 27% of First Franklin Trusts original loan balance. By 2009, it was
clear that large percentages of loans within the First Franklin-label Trusts materially and
adversely breached First Franklins representations and warranties. Amazingly, each of these
sixteen Trusts had delinquency rates over 37%, including FFML 2005-FF10 where 52% of the
loan pool was delinquent.
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315. The poor performance of the First Franklin-label Trusts is easily explained by
First Franklins well-publicized systemic abandonment of its underwriting standards and poor
origination practices during the height of the mortgage boom, which has been brought to light
through government investigations and reports, investor litigation, insurer actions, and news
media sources. For example, the OCCs Worst Ten in the Worst Ten list included First
Franklin as the fifth worst originator based on 2005-2007 loan originations as of March 29,
2009. Moreover, the Senate Report identified First Franklin as one of five mortgage originators
to which Goldman directed the most repurchase requests for breaches of representations and
warranties concerning underwriting loan quality. See Senate Report at 487, n.2051.
316. American International Group Inc. (AIG) sued First Franklin, among others, for
$10 billion on August 8, 2011, alleging that First Franklin and others falsely asserted that the
underlying mortgage-backed securities collateral mortgages were issued according to objective
underwriting guidelines, when in fact, the defendants encouraged borrowers to falsify loan
applications, pressured property appraisers to inflate home values, and ignored obvious red flags
in the underwriting process. See AIG, Inc., et al., v. Bank of America Corp., et al., Index No.
652199/2011 (N.Y. Sup. Ct. Aug. 8, 2011).
317. On April 16, 2012, bond insurer Ambac Assurance Corp. (Ambac) sued Bank of
America, accusing the companys First Franklin and Merrill Lynch units of misrepresentations
concerning mortgage-backed securities. See Ambac Assurance Corp., et al. v. First Franklin Fin.
Corp., et al., Index No. 651217/2012 (N.Y. Sup. Ct. Apr. 16, 2012). Ambac reviewed 1,750
loans in the securitization and found that representations and warranties were breached in 94% of
the loans. Id. Ambac further alleged that First Franklin originated most of the loans, and that
the misrepresentations included underwriting practices and the due diligence done on the pooled
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loans, and at the loan level, such as borrowers incomes and employment. The national media
reported on these types of bond insurer actions. See, e.g., Ambac Sues Bank of America Over
Mortgage-Based Securities, Bloomberg (Apr. 16, 2012); Ambac Backed $856M In Bad MBS Due
To Merrills Tricks: Suit, Law360 (Apr. 16, 2012).
318. Forensic reviews of the First Franklin-label Trusts conducted in other litigation
have confirmed First Franklins systemic breach of representations and warranties. On
September 2, 2011, the FHFA sued Merrill Lynch & Co. and its subsidiary First Franklin, among
others, for $24.8 billion, for misrepresenting the quality of mortgage-backed securities sold to
Fannie Mae and Freddie Mac. See FHFA v. Merrill Lynch & Co., Inc. et al., No. 11-cv-6202
(S.D.N.Y. Sept. 2, 2011). The FHFAs forensic review of thousands of loan origination files from
at least five First Franklin-label Trusts FFMER 2007-1, FFMER 2007-2, FFMER 2007-H1,
FFML 2006-FF18 and FMIC 2006-3 revealed that for the vast majority of the loans reviewed
in those securitizations, there were numerous significant violations of the originators
underwriting guidelines, such as a failure to evaluate the reasonableness of the borrowers stated
income or to correctly account for the borrowers debt, both key factors bearing on eligibility for
a mortgage loan. The FHFA found that First Franklin understated the percentage of non-owner
occupied properties by at least six percentage points, and for many of the securitizations by 10
percentage points or more, thus materially understating the credit risk of the loans. The FHFA
similarly found that First Franklin understated the the true percentage of loans with LTV ratios
over 100% by approximately 30% or more for each of the First Franklin securitizations. Further,
the FHFA found similar alarming breach rates for MLMI 2006-FF1, a trust that is at issue and
was entirely originated by First Franklin.
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319. Similarly, in Allstate v. Merrill Lynch & Co., No. 650559/2011 (N.Y. Sup. Ct.),
plaintiff found that First Franklin severely understated the percentage of loans in the mortgage
pools that had high LTV ratios with respect to FFML 2007-FF2, one of the Trusts at issue here.
The forensic review found that contrary to First Franklins representation that 35.87% of the
loans had an LTV ratio greater than 80%, 74.76% of the loans had an LTV ratio greater than 80%
an understatement of 38.89%.
320. Several other loan-level analyses of First Franklin originated-loans conducted in
other RMBS litigation have corroborated the above-described findings of pervasive and systemic
breaches of representations and warranties by First Franklin. See, e.g., Prudential v. Bank of
America, No. 13-cv-1586 (D. N.J. Mar. 14, 2013) (finding that First Franklin systemically
abandoned its underwriting guidelines in connection with FFML 2006-FF18 and FMIC 2006-3);
Texas County Dist. Ret. v. J.P. Morgan, No. 1-GN-14-000998 (Tex. Dist.) (finding that First
Franklin understated loans with LTV ratios of 80% or greater by approximately 20%, and loans
with LTV ratios of 100% or more by approximately 12%).
6. New Century
321. New Century originated approximately $19.6 billion in mortgage collateral
included in the Trusts. As of March 29, 2009, New Century was ranked as the worst mortgage
originator by the OCCs Worst Ten in the Worst Ten list based on originations from 2005 to
2007. Multiple highly publicized government investigations and lawsuits exposed New
Centurys improper loan origination practices and pervasive noncompliance with its underwriting
guidelines.
322. New Centurys systemic origination of defective loans during the same time
period as the New Century loans were originated and sold to the Trusts were detailed in the FCIC
Report and the Senate Report. The Senate Report found that [s]ubprime lenders like New
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Century were known for issuing poor quality subprime loans. Senate Report at 21. The Senate
Report identified a number of [New Centurys] harmful mortgage practices, including
increasing loan originations, without due regard to the risks associated with that business
strategy; risk layering in which it issued high risk loans to high risk borrowers, including
originating in excess of 40% of its loans on a stated income basis; allowing multiple exceptions
to underwriting standards; and utilizing poor risk management practices that relied on the
companys selling or securitizing its high risk mortgages rather than retaining them. Id. at 236.
323. The FCIC Report concluded that New Centuryonce the nations second-largest
subprime lender ignored early warnings that its own loan quality was deteriorating and
stripped power from two risk-control departments that had noted the evidence. FCIC Report at
157. For instance, [i]n a June 2004 presentation, the Quality Assurance staff reported they had
found severe underwriting errors, including evidence of predatory lending, federal and state
violations, and credit issues, in 25% of the loans they audited in November and December 2003.
In 2004, Chief Operating Officer and later CEO Brad Morrice recommended these results be
removed from the statistical tools used to track loan performance, and in 2005, the department
was dissolved and its personnel terminated. Id.
324. Such massive underwriting failures led to high default rates and eventually New
Centurys collapse. According to the Bankruptcy Court Examiner for New Century, Michael J.
Missal, New Century had a brazen obsession with increasing loan originations, without due
regard to the risks associated with that business strategy. . . . Although a primary goal of any
mortgage banking company is to make more loans, New Century did so in an aggressive manner
that elevated the risks to dangerous and ultimately fatal levels.
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325. The New Century Bankruptcy Report also found that in June 2005, the Internal
Audit Department audited the companys loan origination process at its Sacramento wholesale
fulfillment center and found that 45% of the loans had improper RESPA disclosures, 32% of the
loans did not have approval stipulations fully satisfied, 39% of the loans had noted exceptions
with income calculations and/or verification of income, and 23% had appraisal exception
problems. Id. at 152.
326. New Centurys poor underwriting practices and defective loans have also been the
subject of well publicized lawsuits brought on behalf of government agencies. In December
2009, the SEC charged three former New Century executives, including the CEO, with
fraudulent accounting that misled investors about the companys finances. Senate Report at 236.
The SEC alleged that the New Century executives were downplaying the riskiness of the
companys loans and concealing their high delinquency rates. The complaint stated that,
although New Century had represented itself as a prudent subprime lender, it soon became
evident that its lending practices, far from being responsible, were the recipe for financial
disaster. Id.
327. Loan file reviews confirm New Centurys pervasive and systemic breach of
material representations and warranties regarding quality and characteristics of the loans it
originated. For example, in FHFA v. HSBC, et al., the FHFA reviewed a sample of loan files in
the HASC 2005-I1 and HASC 2006-NC1 securitizations. New Century, (the second largest
Originator of loans in the Trusts) originated all of the loans in these two trusts. The FHFA found
that 17.53% of the loans in HASCC 2005-I1 and 18.12% of the loans in HASC 2006-NC1 had
LTV ratios over 100%. FHFA v. HSBC N. Am. Holdings Inc., et al., No. 11-cv-06189 (S.D.N.Y.
June 28, 2012) Amended Compl. 113.
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D. The Systemic Disregard Of Prudent Securitization
Standards Was Pervasive During The Relevant Period
328. It is equally well documented that between 2004 and 2008, the sponsors that
securitized the residential mortgages and transferred them into the RMBS trusts failed to conduct
adequate due diligence reviews of the mortgage pools to ensure the mortgage loans were of the
same credit quality as represented and complied with federal and state law, as well as that the
purported mortgaged propertys appraised value was accurate.
329. As the FCIC Report noted:
The Commission concludes that firms securitizing mortgages failed to perform
adequate due diligence on the mortgages they purchased and at times knowingly
waived compliance with underwriting standards. Potential investors were not fully
informed or were misled about the poor quality of the mortgages contained in
some mortgage-related securities. These problems appear to have been significant.

FCIC Report at 187.
330. As made clear in the FCIC Report, in their zeal to keep the securitization machine
going and at the behest of originators, RMBS sponsors and their third party due diligence
providers failed to analyze adequate sample sizes of the loan pools, sometimes reviewing as little
as 2%-3% of the entire loan pools. Moreover, when the sponsors and their due diligence firms
identified high percentages of mortgage loans in their sample reviews as deficient, sponsors
pervasively waived in mortgage loans to preserve their business relationships with the
originators or to keep the defective loans off their own books. Consequently, by 2011, it was
equally apparent to all players in the United States mortgage and securitization industry that the
mortgage loans deposited in RMBS trusts issued between 2004 and 2008 materially breached the
sponsors representations and warranties.
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E. There Is Evidence Of Widespread
Breaches Of Representations And
Warranties By The Specific Sponsors Of The Trusts
331. As with other RMBS trusts of the same vintage, the Trusts have been materially
impacted by the sponsors faulty securitization practices. The sponsors systemic and pervasive
sale of residential mortgage loans in the Trusts in breach of representations and warranties is
confirmed through several federal and state government investigations and published reports,
well publicized news reports, and public and private enforcement actions that have described
endemic due diligence failures throughout the period in which the Trusts were created and, more
specifically failures by the same sponsors whose mortgage loans were deposited into the Trusts.
A summary of testimonial and documentary evidence as to each of the major sponsors of the
mortgage loans to the Trusts is set forth below.
1. Lehman
332. Lehman sponsored over $158 billion of mortgage loans securitized in 138 of the
Trusts. Lehman acquired the mortgage loans either from Lehmans own loan origination
affiliates and subsidiaries, Aurora and BNC Mortgage (BNC), whose underwriting abuses are
well documented, or in direct purchases (including in auctions) from third-party loan originators,
some of which are among the most notorious lenders, including GreenPoint, Countrywide,
IndyMac Bank, F.S.B., Wells Fargo, First Franklin, EquiFirst Mortgage and Aegis Mortgage. By
January 1, 2009, it was evident that the credit quality of underlying loan collateral for Lehman-
label Trusts did not match Lehmans and originators representations and warranties. At this time,
over a third of all the loans within the Lehman Trusts were delinquent. Moreover, the Lehman
Trusts had incurred realized losses of over $5 billion. The Lehman Trusts realized losses
continued to mount over the next two years, reaching $15.3 billion in January 2011, representing
over a 200% increase. As of June 1, 2014, the Lehman Trusts have suffered a staggering realized
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losses of over $25.8 billion, meaning that over 16% of the Lehman Trust loan pools have been
written off.
333. Lehmans faulty due diligence practices with respect to whether the loans were
originated in conformity with representations and warranties is well known to U.S. Bank.
Lehmans due diligence principally occurred not during the underwriting phase of the offering,
but while Lehman was inspecting smaller bulk loans for possible purchase from third-party loan
originators after successfully bidding on the loans at auction. Accordingly, at that stage, there
was a disincentive for Lehman to reject, or kick-back, loans as non-compliant with stated
guidelines since the originator would be less likely to select Lehman as the winning bidder in
future auctions. Indeed, according to the FCIC Report, in connection with securitizing loans,
Lehman used a third-party due diligence firm, Clayton Holdings, Inc. (Clayton), to perform
due diligence services. Clayton found that 26% of the total loans underwritten by Lehman failed
to meet the underwriting standards, but that Lehman waived its right to reject 37% of these non-
conforming loans, and included them in the RMBS it securitized anyway. Further, the motto
among Lehmans residential mortgage-backed securities origination sales group became there
are no bad loans only badly priced loans meaning loans found not to comply with
underwriting guidelines were generally not rejected, but simply negotiated to be purchased more
cheaply.
334. Over the past six years, Lehmans securitization practices have been the focus of
several, significant RMBS lawsuits. For example, in their Consolidated Securities Class Action
Complaint filed on February 23, 2009, in In re Lehman Brothers Mortgage-Backed Securities
Litigation, No. 08-cv-6762 (S.D.N.Y.), the class plaintiffs described in detail Lehmans faulty
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due diligence practices in securitizing loans in in Lehman-label trusts issued under, among other
shelves, the SARM and SASC shelves.
335. The results of file reviews conducted by investors further confirmed Lehmans
faulty due diligence practices and pervasive and systemic breach of material representations and
warranties regarding quality and characteristics of the loans it securitized. For example, in In re
Countrywide Fin. Corp., No. 11-ml-02265-MRP, AIG reviewed 188 loans originated by
Countrywide from the SARM 2006-10 securitization, one of the Lehman Trusts at issue, which
demonstrated that that the mortgage pools contain loans rife with fraud and other violations of
representations and warranties. Specifically, AIGs review revealed violations of underwriting
guidelines in over 90% of the loans, including blatant misrepresentations of employment, and
breaches of guidelines. AIGs loan-level analysis of SASC 2006-BC4, a trust at issue
demonstrated that the originatiors and Lehman overstated the percentage of owner-occupied
properties by 17.5 percentage points.
2. Credit Suisse (DLJ Mortgage Capital)
336. Credit Suisse, through its affiliate DLJ Mortgage Capital (DLJ Mortgage), was
major loan seller to the Trusts. DLJ originated over $37 billion in mortgage loans sold to the
Trusts, and Credit Suisse sponsored more than $87 billion in mortgage loans securitized in 94 of
the Trusts under the ABSHE, ARMT, CSAB, CSFB, CSMC, HEAT, HEMT, and IRWHE
shelves. The poor performance of the Credit Suisse-label Trusts is indicative of the widespread
breach of representations and warranties made by Credit Suisse and the originators. By January
1, 2009, nearly a quarter of all loans within the Credit Suisse-label Trusts were delinquent,
including HEAT 2005-7 which was plagued with a 53% delinquency rate at this time. By January
1, 2011, as a result of these delinquencies, losses had mounted to $4.3 billion. To date, the Credit
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Suisee-label Trusts has suffered collateral losses of over $8.2 billion, representing nearly 10% of
the entire loan collateral for these securitizations.
337. It is now well known that during the relevant time period, Credit Suisse was
willing to sacrifice quality for quantity and that it was keenly motivated to maintain a good
relationship with originators for fears it could be locked out of the next auction and could not
fuel its securitization machine. Credit Suisse reported that, from 2003 to 2005, it nearly doubled
the value of residential mortgage loans it securitized, from more than $27 billion to
approximately $50 billion. Credit Suisse RMBS securitization continued to explode thereafter.
From January 2004 through late 2007, Credit Suisse securitized (either itself or by selling
mortgage loans to other sponsors) approximately $128.5 billion in residential mortgage loans. As
detailed herein, to accomplish this tremendous volume growth, Credit Suisse abandoned sound
underwriting practices and knowingly securitized defective loans.
338. The extensive public record confirms that DLJ Mortgage securitizations,
including many of the Trusts, contain extensive breaches of material representations and
warranties. In particular, (1) public investigations have revealed that DLJ Mortgage pervasively
and systematically disregarded its own underwriting guidelines and, as a result, issued mortgages
that did not meet stated criteria in the offering documents; and, (2) loan file reviews by insurers
of transactions that included DLJ Mortgage-sponsored loans have demonstrated pervasive
breaches of underwriting standards.
339. The public record is littered with examples of DLJ Mortgages disregard for
underwriting guidelines and due diligence practices. For example, the FCIC and states attorneys
general have investigated Credit Suisse, and specifically, DLJ Mortgage, in the wake of the
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housing market collapse. In July 2010, Oregon Treasurer Ted Wheeler and Attorney General
John Kroger joined several other plaintiffs in suing Credit Suisse on several RMBS.
340. According to Claytons trending reports made public in September 2010, Clayton
found that 32% of the 56,300 loans that it reviewed for Credit Suisse received the worst possible
grade and failed to meet guidelines. Despite Claytons determination that these loans failed to
meet applicable underwriting standards, Credit Suisse waived in 33% of these defective loans
into securitizations.
341. Credit Suisse has also been the target of other significant RMBS investigations
and lawsuits. Discovery in these actions have uncovered internal reports, emails, and
memoranda clearly demonstrating that DLJ Mortgage committed widespread abuses and made
material misrepresentations in the governing documents. For example, discovery in RMBS
litigation has uncovered evidence that Credit Suisse devised a scheme whereby it was able to
profit on defective loans twice: first, by securitizing them and selling the resulting securities to
investors; and second, by (i) demanding that the originators of the defective loans repurchase the
loans because the defects breached the originators representations and warranties, (ii) settling
the repurchase demands by repricing the loans, and (iii) pocketing the proceeds of those
settlements instead of passing the money on to or repurchasing the defective loans from the
trusts.
342. A review of loan files by MBIA in MBIA v. Credit Suisse Securities (USA) LLC,
et at., Index No. 603751/2009 (N.Y. Sup. Ct. Dec. 14, 2009), which wrote insurance on DLJ
Mortgage certificates, demonstrates that DLJ Mortgage routinely misrepresented the quality of
loans included in the securitizations. In carrying out its review of the approximately 1,386 DLJ
defaulted loan files, MBIA found that 87% of the defaulted or delinquent loans in those
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securitizations contained breaches of DLJ Mortgages representations and warranties. These
findings demonstrated a complete abandonment of applicable guidelines and prudent practices
such that the loans were (i) made to numerous borrowers who were not eligible for the reduced
documentation loan programs through which their loans were made, and (ii) originated in a
manner that systematically ignored the borrowers inability to repay the loans. Moreover, the
rampant and obvious nature of the breaches confirms that Credit Suisse made intentional
misrepresentations concerning its mortgage loans and the due diligence that Credit Suisse
purported to perform regarding the quality of those loans.
343. Investors have reached similar conclusions regarding the defective loan collateral
underlying Credit Suisse securitizations in their review of loans from the Credit Suisee-label
Trusts at issue here. In FHFA v. Credit Suisse Holdings (USA), Inc., No. 11-cv-06200 (S.D.N.Y.
Sept. 2, 2011), FHFA conducted a forensic review of close to 10,000 loan files from 43 Credit
Suisse securitizations, including 11 of the Credit Suisse-label Trusts at issue in this action.
8
The
forensic review revealed that for a majority of the loans reviewed in those Securitizations, there
were numerous breaches of the originators underwriting guidelines, such as failure to evaluate
the reasonableness of the borrowers stated income or to correctly account for the borrowers
debt, both key factors bearing on eligibility for a mortgage loan.
344. In November 2011, the Allstate Insurance Company (Allstate) filed a complaint
alleging fraud against Credit Suisse, DLJ Mortgage and other affiliates in connection with the
sale of approximately $232 million in highly-rated certificates (the Allstate Complaint). The
trusts at issue in the Allstate Complaint included six Credit Suisse-label Trusts: HEMT 2006-2,

8
The eleven Credit Suisse-label Trusts are the following: HEAT 2006-1; ABSHE 2005-HE8;
ABSHE 2006-HE4; ABSHE 2006-HE5; ARMT 2005-10; ARMT 2005-11; ARMT 2005-12;
ARMT 2006-1; CSFB 2005-11; CSFB 2005-12; and HEAT 2006-4.
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ARMT 2005-6A, ARMT 2007-1, CSMC 2006-8, CSMC 2007-3 and CSMC 2007-5. Allstate
performed a forensic review of sampling of loans from the loan pools, which showed that the
loans were riddled with defects constituting pervasive breaches of representations and
warranties. For example, Allstate found that Credit Suisse systematically and significantly
overstated the number of owner-occupied properties and understated the loans LTV and CLTV
ratios, and routinely included loans that failed to conform to the originators stated
underwriting standards. Moreover, Allstates forensic analysis found that Credit Suisse loan
originators which also originated many of the mortgage loans in the Trusts, including DLJ
Mortgage, Credit Suisse, Countrywide, Option One, TBW) systematically abandoned
underwriting standards.
9

345. In Prudential Insurance Company of America v. Credit Suisse Securities (USA)
LLC et al., No. 12-cv-07242 (D. N.J. Nov. 21,2012), Prudentials loan-level analysis revealed
systematic failures in Credit Suisses loan underwriting and assignment practices. Specifically,
Prudential found that across the twenty-three Credit Suisse securitizations that it tested, including
15 Credit Suisse-label Trusts at issue here, a staggering 48.67% of the mortgage loans contained
at least one material defect.
10
In a host of other cases, monoline insurers and investors have
reached similar findings of Credit Suisses widespread breach of representations and warranties
concerning the loans securitized in the Credit Suisse-label Trusts. See, e.g., Assured Guaranty
Municipal v. DLJ, Index No. 652837/2011 (N.Y. Sup Ct. Oct. 17, 2011) (forensic review of at

9
In the same case, Allstate found systemic breaches of representations and warranties within the
loan pools for TBW 2006-4, one of Trust at issue here that was sponsored by Taylor Bean
Whittaker.
10
The 15 Credit Suisse-label Trusts are: ABSHE 2007-HE1; CSFB 2005-1; HEAT 2004-3;
HEAT 2004-6; HEAT 2004-8; HEAT 2005-1; HEAT 2006-1; ABSHE 2005-HE1; HEAT 2004-
2; HEAT 2004-4; HEAT 2004-5; HEAT 2005-3; HEAT 2005-5; HEAT 2005-6; and HEAT
2006-2.
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least six of the Trusts, including CSAB 2006-2, CSAB 2006-3, CSAB 2006-4, CSAB 2007-1,
CSMC 2007-3 and TBW 2007-2, confirmed that DLJ repeatedly and pervasively breached
representations about the loans and that a massive number of defective mortgages were
packaged into securities); FGIC v. Credit Suisse, No. 651178/2013 (N.Y. Sup.Ct. Apr. 2, 2013)
(forensic review of at least one Trust, HEMT 2006-2, confirmed that Credit Suisses pre-closing
representations were fraudulent, the warranties it made in the insurance agreement were false,
and it willfully disregarded and frustrated its contractual covenants.); Mass. Mutual v. DLJ
Mortgage, No. 11-cv-30047 (D.Mass. Feb. 25, 2011) (analysis of at least seven Trusts, including
CSAB 2006-1, CSAB 2006-2, CSAB 2006-3, CSAB 2006-4, CSAB 2007-1, CSMC 2007-1 and
CSMC 2007-3 confirmed Credit Suisse Defendants abandoned or disregarded disclosed
underwriting guidelines, often originating or acquiring loans issued to borrowers regardless of
the borrowers ability to repay.); Minnesota Life Ins. Co. v. Credit Suisse First Boston Mortgage
Sec. Corp. et al., No. 12-cv-2671 (Dist. Minn. Oct 18, 2012) (plaintiffs review of loans from
CSAB 2006-2, CSAB 2006-3, and CSMC 2007-4 demonstrated systemic abandonment of
[Credit Suisses] stated underwriting practices.); NCUA v. Credit Suisse Sec. (USA) LLC et al.,
No. 13-cv-6736 (S.D.N.Y.) (plaintiffs analysis of ARMT 2006-3, ARMT 2007-1 and HEMT
2006-2 revealed that the Originators had systematically abandoned the stated underwriting
guidelines in the Offering Documents, and that [b]ecause the mortgages in the pools
collateralizing the RMBS were largely underwritten without adherence to the underwriting
standards in the Offering Documents, the RMBS were significantly riskier than represented.);
Texas County Dist. Ret. v. J.P. Morgan, No. 1-GN-14-000998 (analysis of ARMT 2005-10 and
CSMC 2006-8 provided strong evidence that Credit Suisse knowingly and purposefully
included defective loans in its RMBS that failed to meet the applicable standards, systematically
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disregarded warnings from Due Diligence Firms, and then misrepresented the quality of those
loans to investors to induce them into purchasing the RMBS.).
3. WaMu
346. WaMu, together with its affiliates, including Long Beach Mortgage Co. (Long
Beach) was one of the Trusts largest loan sellers. WaMu originated nearly $80 billion in
mortgage collateral included in the Trusts. Additionally, WaMu sponsored over $86 billion in
loans sold to eighty four separate Trusts under the WAMMS, WAMU, WMABS, and WMALT
shelves. The poor performance of the WaMu-label Trusts is strong evidence of its pervasive
breach of representations and warranties to the Trusts. By January 1, 2009, collateral losses had
already reached over $605 million. Further, approximately 23% of all loans within the WAMU-
label Trusts were delinquent, including 17 separate Trusts that had delinquency rates in excess of
40%. By January 2011, as a result of these severe delinquencies, realized losses increased to
$4.5 billion. To date, the WaMu-label Trusts have suffered collateral losses of over $10 billion,
representing nearly 12% of the entire loan collateral for these securitizations.
347. WaMus widespread breach of its representations and warranties to the Trusts is
further evidenced by immense record compiled through governmental investigations and reports
as well as private litigation establishing widespread breaches of representations and warranties.
For example, WaMu was ranked as the third worst mortgage originator by the OCCs Worst Ten
in the Worst Ten list based on 2005-2007 originations as of March 29, 2009.
348. WaMus abandonment of its represented underwriting practices and systemic
origination of defective loans during the same time period as the WaMu loans securitized in the
Trusts were also detailed in the FCIC Report and the Senate Report. The FCIC Report
concluded that firms, including WaMu, originated a vast number of high-risk, nontraditional
mortgages that were in some cases deceptive, in many cases confusing, and often beyond
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borrowers ability to repay. FCIC Report at 418. WaMu also conducted a post mortem
review of 213 Long Beach loans that experienced first payment defaults in March, April, and
May of 2005, which found that many early defaults were not only preventable, but that in some
instances fraud should have been easily detected from the presence of White Out on an
application or a borrower having two different signatures. Senate Report at 78.
349. According to the Senate Report, WaMu and Long Beach turned increasingly to
higher risk loans over a four-year period, increasing its subprime loans from nearly $4.5 billion
in 2003, to $29 billion in 2006. Id. at 2-3. WaMu and Long Beach failed to enforce compliance
with their own lending standards; allowed excessive loan error and exception rates; exercised
weak oversight over the third party mortgage brokers who supplied half or more of their loans;
and tolerated the issuance of loans with fraudulent or erroneous borrower information. Id. at 3.
Moreover, WaMu and Long Beach securitized not just poor quality loans, but also loans that its
own personnel had flagged as containing fraudulent information. Id. at 125. Finally, in
September 2008, WaMus Corporate Credit Review team released a report which found that
internal controls intended to prevent the sale of fraudulent loans to investors were ineffective and
that of the 25 loans tested, 11 reflected a sale date after the completion of the investigation
which confirmed fraud. Id. In other words, even loans marked with a red flag indicating fraud
were being sold to investors.
350. WaMus poor origination and securitization practices have been exposed in
numerous well-publicized lawsuits, including many involving the WaMu Trusts at issue here.
For example, in FHFA v. JPMorgan Chase & Co., No. 11-cv-06188 (S.D.N.Y. Sept. 2, 2011), the
FHFA brought an action to recover losses suffered on 103 securitizations sponsored by
JPMorgan and its affiliates, including WaMu. Notably, the FHFA found misstatements and
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omissions of material fact concerning the quality of the underlying mortgage loans, the
creditworthiness of the borrowers, and the practices used to originate such loans for thirteen of
the WaMu label Trusts at issue here.
11
Specifically, the FHFA found that with limited exception,
WaMu materially understated owner occupancy in these securitizations by approximately 10
percent points or more. The data also revealed that WaMu materially understated LTV ratios.
351. A host of other investors in other litigation involving WaMu-label Trusts at issue
here have reached similar findings of widespread breaches after conducting forensic analyses.
See Allstate Bank, et al. v. JPMorgan Chase Bank, et al., Index No. 650398/2011 (N.Y. Sup. Ct.
Feb. 15, 2011) (plaintiffs forensic analysis of WAMU 2005-AR5, WAMU 2006-AR11, WAMU
2007-HY7, WAMU 2007-OA1, WAMU 2007-OA3 and WMALT 2005-4 disclosed
underwriting standards were systematically ignored in originating or otherwise acquiring non-
compliant loans.);
12
CMFG v. J.P. Morgan Sec., No. 13-cv-00580 (W.D. Wis. Aug. 15, 2013)
(plaintiffs review of WAMU 2005-AR15 confirmed WaMu misrepresent[ed] the fundamental
attributes of, and thus the credit risk associated with, the pools of mortgage loans collateralizing
the RMBS.); Western Southern Life Ins. Co. v. Bank of America N.A., No. 11-cv-00667 (S.D.
Ohio Sept. 26, 2011) (forensic review of WMALT 2005-7, WMALT 2005-9; WMALT 2006-4,
WMALT 2006-5 and WMALT 2007-OA3 revealed WaMu and originators had abandoned or

11
These 13 WaMu-label Trusts are: WAMU 2007-OA3; WMABS 2006-HE3; WMABS 2006-
HE5; WMABS 2007-HE1; WMABS 2007-HE2; WMALT 2005-10; WMALT 2005-9; WMALT
2006-AR4; WMALT 2006-AR5; WMALT 2006-AR8; WMALT 2007-OA1; WMALT 2007-
OA2; andWMALT 2007-OA3. Notably, in this action the FHFAs forensic review uncovered
extensive breaches of representations in two other Trusts at issue in this action, AABST 2005-5
and AHM 2005-4.
12
In a separate action, Allstate v. CitiMortgage, Index No. 650432/2011 (N.Y. Sup. Ct. Feb. 17,
2011), Allstates forensic review uncovered extensive breaches of representations and warranties
in CRMSI 2006-3 and CRMSI 2007-2, two securitizations sponsored by CitiMortgage that are
the subject of this action.
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disregarded underwriting guidelines and failed to conduct adequate due diligence so that they
could purchase as many loans as possible for securitization.); Fed. Home Loan Bank of SF v.
Deutsche Bank Sec. Inc. et al., No. 10-cv-03039 (N.D. Cal. July 12, 2010) (plaintiffs loan-level
analysis of WMALT 2005-5, WMALT 2005-8 and WMALT 2006-3 confirmed Defendants
made untrue statements, or omitted important information, about such material facts as the Loan-
to-Value ratios of the mortgage loans, the number of borrowers who did not live in the houses
that secured their loans . . ., and the extent to which the entities that made the loans departed
from their own standards in doing so.); Mass Mutual v. DLJ Mortg., No. 11-cv-30047
(plaintiffs forensic review demonstrated that loans were issued on the basis of overstated
incomes, inflated appraisals, false verifications of employment, and exceptions to underwriting
criteria that had no proper justification.); Texas County Dist. Ret. v. J.P. Morgan, No. 1-GN-14-
000998 (finding pervasive breaches of representations and warranties in WAMU 2005-AR15,
WAMU 2006-AR16, WAMU 2007-HY3, WAMU 2007-OA4, WAMU 2007-OA5, WFMBS
2004-BB, WFMBS 2004-R, WFMBS 2005-AR8 and WMALT 2007-OA4).
13

352. On August 26, 2009, Deutsche Bank, which was the trustee for 99 trusts in which
WaMu sold, sponsored and serviced loans, filed a federal lawsuit against the FDIC (as the
receiver for WaMu) and others on behalf of the WaMu-DB Trusts and the investors in the WaMu-
DB Trusts seeking to enforce the trusts and Certificateholders rights (the Deutsche Bank
Litigation). Deutsche Bank commenced its action because the FDIC failed to respond to its
proof of claim filed the preceding year. Deutsche Banks complaint detailed WaMus
systemically deficient origination practices and pervasive sale of mortgage loans that failed to

13
In the same action, Texas County found that large percentages of defective loans were
included in AHM 2005-4, BAYV 2004-C, BAYV 2007-A, CMALT 2007-A8 and DSLA 2004-
AR1, which are also Trusts at issue here.
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comply with representations and warranties between 2004 and 2008. See Deutsche Bank Natl
Trust Co. v. FDIC, as receiver for Washington Mutual Bank, et. al., No. 09-cv-01656 (D.D.C.
Aug. 26, 2009). Here, despite having access to the same information and being governed by the
same set of obligations set forth in the PSAs and pursuant to the TIA, U.S. Bank failed to file a
timely proof of claim in WaMus bankruptcy, failed to attempt to submit a late-filed claim
pursuant to FDIC rules, failed to enforce the Trusts rights against either the FDIC or JPMorgan
(as receiver and successor in interest, respectively), and failed to take any other acts to protect
the Trusts and Certificateholders as required by the PSAs and the TIA.
353. On November 19, 2013, JPMorgan and the Justice Department agreed to a
landmark $13 billion settlement the largest settlement with a single entity in American history
to resolve federal and state civil claims arising out of the packaging, marketing, sale and
issuance of RMBS by JPMorgan, Bear Stearns and WaMu prior to January 1, 2009. As part of
the settlement, JPMorgan acknowledged it made serious misrepresentations to the public -
including the investing public - about numerous RMBS transactions, including 78 of the WaMu
deals at issue here.
4. Goldman Sachs
354. Goldman Sachs (Goldman), through its affiliate Goldman Sachs Mortgage
Company, sponsored more than $59.7 billion in mortgage loans securitized in 64 Trusts. Given
the astounding delinquencies within the Goldman-label Trusts, it was evident by January 1, 2009,
that Goldman had dumped toxic loans within these trusts. By 2009, over 18% of all loans within
these securitizations were delinquent. Twenty-one of Trusts had delinquency rates exceeding
30%, including GSAMP 2006-HE3 where over 61% of the loan pool was delinquent. As a
result, the Goldman-label Trusts realized losses increased exponentially over the next two years,
increasing threefold from approximately $1.3 billion in realized losses to $4.3 billion by January
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2011. As of June 2014, the Goldman-label Trusts have suffered over $7.2 billion in collateral
losses, signifying that over 11% of the entire loan pool has been written off.
355. The FCIC Report and the Senate Report are replete with findings that Goldman
routinely securitized defective loan pools and performed little or no due diligence of the loans
underlying the Trusts. For example, according to an internal Clayton trending report, an average
of 22.9% of these loans did not comply with the stated underwriting guidelines and did not have
compensating factors that would merit approval; yet, Goldman waived back in between 30%-
40% of these defective loans. While Clayton reviewed only a sample of the Goldman-securitized
loan pools, as the FCIC concluded based on its own sample, one could reasonably expect [the
untested loans] to have many of the same deficiencies, and at the same rate, as the sampled
loans. Senate Report at 170.
356. In May 2009, Goldman entered into a settlement with Massachusetts to resolve
the investigation, agreeing to pay approximately $50 million in relief to homeowners and an
additional $10 million to the State. In announcing the settlement, the Massachusetts Attorney
General specifically stated that Goldman did not take sufficient steps to avoid placing problem
loans in securitization pools.
357. In addition, Goldmans securitization practices have been investigated by the
SEC. On July 15, 2010, the SEC announced that Goldman had agreed to pay a then-record $550
million to settle SEC charges that Goldman misled investors in a subprime mortgage product just
as the U.S. housing market was starting to collapse. In agreeing to the SECs largest-ever
penalty paid by a Wall Street firm, Goldman also acknowledged that its marketing materials for
the subprime product contained incomplete information.
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358. Over the past five years, Goldman has also been a defendant in at least 12
significant RMBS investor lawsuits. Apart from actions alleging Goldman engaged in
widespread breach of representations
14
, forensic investigations and loan-level reviews conducted
by investors in these actions on loans included in the Goldman-label Trusts or substantially
similar offerings confirmed Goldmans own characterizations of these securitizations: junk,
dogs, crap, and lemons. For example, on September 28, 2010, Federal Home Loan Bank
of Seattle (FHLB-Seattle) filed a securities fraud action against Goldman and related affiliates
concerning four Goldman-sponsored RMBS offerings. In FHLB-Seattles analysis of the quality
of the loans included in these offerings, it found that Goldman made untrue or misleading
statements regarding LTV ratios, owner occupancy, and/or underwriting guidelines for between
50% and 60% of the mortgage loans included in these offerings.
359. Similarly, on June 13, 2012, the FHFA filed a securities fraud action against
Goldman, its affiliates and executives concerning 40 RMBS offerings in which Fannie Mae and
Freddie Mac had invested, including 10 Goldman-label Trusts at issue here.
15
The FHFAs
review revealed that for each securitization Goldman and the originators representations and
warranties regarding owner occupancy were materially inaccurate, understating the percentage of
non-owner occupied properties by at least 5.9%, and for many securitizations by 10% or more.

14
See, e.g., Western Southern Life Insur. v. Bank of America, No. 11-cv-00667 (alleging that
Goldman abandoned its disclosed underwriting guidelines in connection with GSR 2006-1F,
which is a Trust at issue); Western Southern Life Insur. v. Goldman, No. A1106193 (Ohio
Com.Pl.) (alleging loans in GSR 2007-1F, a Trust at issue were often issued on the basis of
overstated incomes, inflated appraisals, false verifications of employment, and other departures
from the disclosed underwriting criteria that had no proper justification, often purchasing loans
issued to borrower's regardless of their ability to repay).
15
These 10 Goldman Sachs-label Trusts are the following: GSAA 2005-11; GSAA 2006-5;
GSAMP 2005-AHL2; GSAMP 2006-HE3; GSAMP 2006-HE4; GSAMP 2006-HE7;GSAMP
2006-HE8; GSAMP 2007-HE1; GSAMP 2007-HE2; and GSAMP 2007-NC1.
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The data review further revealed that Goldmans representations and warranties concerning the
LTV ratios of the mortgage loans in each of the securitizations were materially false and
understated at the time of the loans origination. For 28 of the 42 Trusts, the data review
revealed that at least 10 percent of the mortgages had a true LTV ratio over 100%. For 10 of the
42 Trusts, the data review revealed that at least 20 percent of the mortgages had a true LTV ratio
over 100%.
360. Several other investors forensic reviews of loans within the Goldman-label Trusts
have confirmed Goldmans practice of packaging defective loans. See, e.g., Prudential Ins. Co.
v. Goldman Sachs & Co. et al., No. 12-cv-06590 (D. N.J. Oct. 16, 2012) (plaintiffs forensic
review of GSAMP 2006-HE2, GSAMP 2006-HE3, GSAMP 2006-HE7 and GSAMP 2007-HE2
confirmed that lenders that originated and sold Mortgage Loans had systematically abandoned
the stated underwriting guidelines.); Royal Park v. Goldman Sachs, Index No. 652454/2013
(N.Y. Sup. Ct. July 12, 2013) (plaintiffs forensic review of GSAA 2006-3, GSAA 2006-5,
GSAA 2006-9, GSAMP 2005-AHL2, GSAMP 2006-HE2, GSAMP 2006-HE3 and GSAMP
2006-HE8 proved originators had completely abandoned its stated underwriting guidelines and
was simply seeking to originate as many loans as possible, without any regard for its borrowers
actual repayment abilities or the true value and adequacy of its mortgaged properties to serve as
collateral.); Deutsche Zentral-Genossenschaftsbank AG v. Goldman Sachs Group, Index No.
653134/2012 (N.Y. Sup. Ct. Apr. 5, 2013) (plaintiffs extensive investigation and analysis by
Plaintiff into a large sample of the Loan Pools revealed that [Goldman] materially
misrepresented the loan-to-value (LTV) and combined loan-to-value (CLTV) ratios, and the
rates of owner-occupancy for the Loan Pools for GSAA 2006-1, GSAA 2006-3, GSAA 2006-9
and GSAMP 2006-HE3); FDIC v. Ally Sec. LLC, et. al., No. 12-cv-00872 (W.D. Tex. Sept. 20,
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2012) (analysis of loans within GSR 2004-11 confirmed that Goldman pushed and sold the
securities with false statements about the quality of the underlying mortgages.); Texas County
Dist. Ret. v. J.P. Morgan, No. 1-GN-14-000998 (plaintiffs loan-level review of GSAMP 2006-
HE7, GSR 2005-AR2 and GSR 2005-AR3 showed that Goldman Sachs included recklessly
underwritten loans in its RMBS that failed to meet the applicable standards, systematically
disregarding its own and third-party due diligence, and then misrepresented the quality of those
loans to investors to induce them into purchasing the RMBS.).
5. Bank of America
361. Bank of America was the sponsor for over $43 billion of mortgage loans included
in 48 Trusts under the ABFC, BAFC, BOAMS and MECA shelves. Although the securities were
offered as conservative investments, the Bank of America-label Trusts have been marked by poor
performance. By January 1, 2009, the Bank of America-label Trusts were averaging delinquency
rates of approximately 13%, with 6 trusts experiencing delinquency rates in excess of 30%,
including ABFC 2007-WMC1 which had delinquencies of over 48% of its entire loan pool. As
a result of these severe delinquencies, the Bank of America-label Trusts began to incur alarming
losses. For example, between 2009 and 2011 collateral losses among the Bank of America-label
Trusts increased five-fold from approximately $297 million to $1.8 billion. As of June 2014,
these trusts have suffered collateral losses of approximately $2.6 billion.
362. Bank of America was instrumental in originating and securitizing an enormous
volume of defective loans, including by providing financing to four of the five largest subprime
lenders during the 2004-2008 time period. In 2004, Bank of America announced its plan to
devote $750 billion to provide home loans in low- and moderate-income (LMI) communities,
thereby greatly expanding its subprime lending profile. In 2005 alone, Bank of America
provided more than $33.2 billion in mortgage loans to LMI borrowers. According to the FCIC
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Report, in June 2012, approximately 17% of the LMI loans originated by Bank of America
between 2004 and 2007 were delinquent at some point for ninety days or more. (June 16, 2010
Bank of America Letter to FCIC, Schedule 2.5.) Bank of America, however, retained only about
50% of those LMI loans on its balance sheet and either sold or securitized the rest. Id.
363. During the 2004-2008 time period, Bank of America also helped to finance loans
originated by Countrywide, the nations top subprime originator; it purchased and securitized
loans from Ameriquest, the second largest subprime originator; it financed loans by New
Century, the third largest subprime lender; and it partnered with First Franklin, the fourth largest
subprime lender, to securitize and sell its subprime loans. In July 2008, Bank of America
acquired Countrywide, which was investigated that same year by the Federal Bureau of
Investigation (FBI), the U.S. Justice Department (DOJ) and multiple state attorneys general
offices for predatory lending and securities fraud. Bank of America is still contending with
legacy liability from Countrywides unscrupulous loan origination and underwriting practices.
364. Bank of Americas securitization practices have been the subject of investigations
and enforcement actions by both state and federal regulators. For example, on August 6, 2013,
the DOJ filed suit against Bank of America for defrauding investors in connection with the sale
of over $850 million of RMBS, including the same BOAMS shelf from which several of the
Trusts in this action issued. The complaint alleges that Bank of America lied to investors about
the relative riskiness of the mortgage loans backing the Bank of America-label RMBS, made
false statements after intentionally not performing proper due diligence and filled the
securitization with a disproportionate amount of risky mortgages originated through third party
mortgage brokers. In particular, the DOJ alleged that more than 40% of the mortgages in the
BOAMS 2008-A collateral pool did not substantially comply with Bank of Americas
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underwriting standards in place at the time they were originated and did not have sufficient
documented compensating factors. As alleged in the DOJ complaint, Bank of America knew that
specific loans in the BOAMS 2008-A collateral pool did not comply with Bank of Americas
underwriting standards and that Bank of America also concealed significant risks associated with
the mortgages backing the BOAMS 2008-A securitization. For instance, Bank of America
sponsored more than 70% of the loans through third party mortgage brokers. These loans, known
as wholesale mortgages, were riskier than similar mortgages originated directly by Bank of
America. More significantly, at the same time Bank of America was finalizing this deal, it was
receiving a series of internal reports that showed an alarming and significant decrease in the
quality and performance of its wholesale mortgages.
365. Bank of Americas mortgage securitization practices also have been the subject of
an ongoing New York Attorney General investigation since May 2011, and Bank of America
separately and as successor-in-interest to Countrywide has been the target of numerous lawsuits
alleging misconduct in connection with loan origination, underwriting, servicing, and
securitization practices.
366. Bank of America has been sued numerous times for its own defective loan
underwriting practices, as well as those of Countrywide, First Franklin, Merrill Lynch and other
affiliates or acquired lenders. For example, in August 2011, AIG sued Bank of America for
violations of the federal securities laws for misrepresentations in connection with certain RMBS
collateralized by loans originated by Bank of America, Countrywide, and Merrill Lynch,
including BAFC 2006-I, one of the Bank of America-label Trusts at issue here. See AIG, Inc., et
al. v. Bank of Am. Corp., et al., Index No. 652199/2011 (New York Sup. Ct. Aug. 8, 2011).
Among other things, AIGs complaint detailed Bank of Americas own risky lending practices,
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citing for example a June 13, 2005 internal email from Countrywide CEO Mozilo to
Countrywide Chief Financial Officer (CFO) David Sambol, in which Mozilo complained that
even Countrywide could not match some of Bank of Americas riskier products. The AIG
complaint also provided detailed accounts of former Bank of America employees who confirmed
that Bank of America abandoned its underwriting guidelines, including routinely granting
manual exceptions in order to ensure that sufficient loan volume was maintained.
367. Forensic and loan level reviews of several Bank of America-label Trusts have
confirmed the poor quality of mortgage loans securitized and sold by Bank of America to the
Trusts. For example, in FHFA v. Bank of America, No. 11-cv-06195 (S.D.N.Y. Sept. 2, 2011),
the FHFA conducted a review of five Bank of America-label Trusts at issue here: ABFC 2006-
HE1, BAFC 2006-G, BAFC 2006-H, BAFC 2007-A, and BAFC 2007-C. The FHFAs review of
these Trusts revealed that Bank of Americas representations regarding the true percentage of
non-owner occupied loans within the loan pool were materially inaccurate, understating the
percentage of non-owner occupied properties by approximately 10%. The forensic review also
revealed that at least 2.54% of the mortgage loans for each securitization had an LTV ratio over
100%, and for most securitizations this figure was between 10-15% percent of the mortgages.
For ABFC 2006-HE1, the data review revealed that more than 18% of the mortgages in the
sampled loan group had a true LTV ratio over 100%.
16

368. In a host of other cases involving Bank of America-label Trusts at issue, investors
forensic analysis or reunderwriting of loan files have have confirmed the poor quality of

16
In this action, the FHFA reached similar conclusions regarding rampant breaches of
representations and warranties concerning the credit quality of the underlying loan collateral for
STALT 2005-1F, another of the Trusts at issue in this action that was sponsored by SunTrust
Asset Funding LLC. Similarly, in another action, FHFA v. SG Americas, et al., No. 11-cv-06203
(S.D.N.Y.), FHFA found widespread breaches in SGMS 2006-FRE2, another Trust at issue here.
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mortgage loans securitized and sold by Bank of America to the Trusts. See e.g., Western
Southern Life Ins. v. Bank of America, No. 11-cv-00667 (finding alarming mispresentations with
respect to LTV and owner occupancy in BAFC 2006-5, BAFC 2006-H, BAFC 2007-1, and
BAFC 2007-C); CIFG Assurance N. Am. Inc. v. Bank of America N.A., Index No. 654028/2012
(N.Y. Sup. Ct. Nov. 20, 2011) (finding that Bank of Americas faulty securitization practices led
to inclusion of high percentage of defective loans in BAFC 2005-6, BAFC 2005-8 and BAFC
2006-1, three of the Trusts at issue here); In re Countrywide Fin. Corp., No. 12-cv-04316 (C.D.
Cal.) (finding that there was widespread and systematic departure from the originators
underwriting guidelines in connection with the loans sold to BAFC 2006-8T2, BAFC 2007-1
and BAFC 2007-3); In re Countrywide Fin. Corp., No. 12-cv-04775 (C.D. Cal.) (finding
alarming breaches rates with respect to BAFC 2006-A); In re Countrywide Fin. Corp., No. 11-
ml-02265 (finding systemic and pervasive breaches within BAFC 2006-G); Prudential v. Bank of
America, No. 13-cv-01586 (Prudentials loan-level analysis has revealed systematic failures in
Defendants loan underwriting and assignment practices with respect to BAFC 2004-2 and
ABFC 2006-HE1); Texas County Dist. Ret. v. J.P. Morgan, No. 1-GN-14-000998 (forensic
review of ABFC 2006-HE1, BAFC 2006-8T2, BAFC 2006-G and BAFC 2007-3 demonstrated
that Bank of America included recklessly underwritten loans in its RMBS that failed to meet the
applicable standards systematically disregarding its own and third-party due diligence, and then
misrepresented the quality of those loans to investors.)
6. UBS
369. UBS, through its affiliate UBS Real Estate Securities, Inc., sponsored more than
$39 billion in mortgage loans sold and securitized in 58 Trusts. By January 2009, it was clear
that UBS had deposited a large percentage of toxic loans in the UBS-label Trusts. Preliminarily,
the UBS-label Trusts had already suffered collateral losses of $1.2 billion. Moreover, the UBS
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Trusts had severe delinquencies, as 26% of the loans within these Trusts were delinquent. Over
the next two years, realized losses nearly tripled to over $3.7 billion. The Trusts continue to
suffer tremendous collateral writedowns, as the UBS-label Trusts have suffered over $5 billion
in realized losses.
370. UBSs deficient due diligence practices are well known. For example, Claytons
trending reports revealed that in the period from the first quarter of 2006 to the first quarter of
2007, 20% of the mortgage loans UBS submitted to Clayton to review in RMBS groups were
rejected by Clayton as falling outside the applicable underwriting guidelines. Of the mortgage
loans that Clayton found defective, 33% of the loans were subsequently waived in by UBS
without proper consideration and analysis of compensating factors and included in
securitizations.
371. Over the past five years, UBSs securitization practices have been the focus in at
least nineteen significant RMBS lawsuits, including actions by the FHFA, Federal Home Loan
Banks, monoline insurers and RMBS holders. Forensic investigations and loan-level reviews of
the UBS-label Trusts and susbantially similar UBS securitizations conducted by plaintiffs in
these actions have confirmed the pervasive breaches of representations and warranties in UBS-
label RMBS. For example, on July 27, 2011, the FHFA filed suit against UBS alleging UBS
made untrue or misleading statements regarding the mortgage loans LTV ratios, owner
occupancy status, and/or compliance with underwriting guidelines in connection with sixteen
UBS-sponsored securitizations, fourteen of which are at issue here. See FHFA v. UBS Americas
Inc. et al., No. 11-cv-05201 (S.D.N.Y. July 27, 2011).
17
The FHFAs review of at least 1,000

17
These fourteen UBS-label Trusts are the following: MABS 2005-FRE1, MABS 2005-HE2,
MABS 2005-WF1, MABS 2006-FRE2, MABS 2006-HE2, MABS 2006-NC2, MABS 2006-
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randomly selected mortgage loans from each trust revealed that approximately 78% of the
reviewed loans were not underwritten in accordance with the applicable underwriting guidelines.
On July 25, 2013, the FHFA announced that it had reached an agreement to settle the UBS case
for $885 million.
372. In Prudential v. UBS, No. ESX-L2489-13. (Sup. Ct. N.J.), Prudentials loan-level
analysis of seven UBS-label Trusts at issue revealed that across all of the Offerings that
Prudential tested, 44.93% of the Mortgage Loans contained at least one material defect, which
means that nearly 12,600 of the Mortgage Loans underlying the tested Certificates alone were
materially defective.
18
See also, Royal Park v. UBS, Index No. 653901/2013 (N.Y. Sup. Ct.
Nov. 7, 2013) (forensic analysis of MABS 2005-WF1, MABS 2006-HE4, MABS 2006-WMC2
and MARM 2007-1 demonstrated that UBS and the originators affirmatively misrepresented
material information regarding the very nature and credit quality of the certificates and their
underlying loans.).
373. The results of these litigants loan level reviews of UBS securitizations were
corroborated by the findings of the Association of Financial Guaranty Insurers (AFGI), which
wrote to UBS on November 30, 2011, on behalf of its industry members. In the November 30,
2011 letter, the AFGI stated that its members had performed sufficient sampling of loans within
UBS securitizations and have concluded that well more than half of the 2005/2006/2007
vintage first and second lien residential mortgage loans backing such RMBS were ineligible
for securitization. The AFGI concluded that [g]iven that a large percentage of the loan pools

NC3, MABS 2006-WMC2, MABS 2006-WMC3, MABS 2007-HE2, MARM 2006-2, MARM
2007-1, and MARM 2007-3.
18
These 7 UBS-label Trusts are the following: MABS 2004-WMC3, MABS 2005-WMC1,
MABS 2006-FRE2, MABS 2006-HE4, MABS 2006-NC1, MABS 2006-NC3, and MABS 2006-
WMC3.
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securitized by UBS are comprised of loans originated by discredited originators (such as
IndyMac), well-known to have originated high percentage of fraudulent and other ineligible
residential mortgage loans, this high percentage of ineligible loans should not be surprising.
See also, Assured Guaranty Municipal Corp. v. UBS Real Estate Sec. Inc., No. 12-cv-01579
(S.D.N.Y. Mar. 5, 2012) (monoline insurers analysis of three UBS securitizations, including
MARM 2007-1 and MARM 2007-3 at issue here, revealed that between 80% to 95% of the loans
breached one or more of UBSs representations and warranties).
7. Merrill Lynch
374. Merrill Lynch, through its affiliate Merrill Lynch Mortgage Lending, sponsored
more than $26.1 billion mortgage loans securitized in 36 Trusts. By virtue of the staggering
delinquencies and collateral losses, it was clear that by January 1, 2009 that Merrill Lynch had
filled with toxic loan pools. By that time, the Merrill Lynch Trusts averaged delinquency rates of
over 26.4%, with 18 of the 36 trusts experiencing delinquency rates in excess of 40%, including
MABS 2006-FRE1 which had delinquencies of over 67.6% of its entire loan pool. As a result of
these delinquencies, realized losses grew from $1.1 Billion in January 2009 to $3.7 billion in
January 2011, representing overa 200% increase. In total, the Merrill Lynch-label Trusts have
suffered collateral losses of over $5.3 billion, signifying that over 20% of these Trusts loans have
been written off.
375. The poor credit quality of the Merrill Lynch-label Trusts is consistent with the
highly-publicized government reports and RMBS litigation that have exposed Merrill Lynchs
improper securitization practices and systemic breach of representations and warranties. For
instance, Claytons trending reports showed that in the period from the first quarter of 2006 to
the second quarter of 2007, 23% of the mortgage loans that Merrill Lynch submitted to Clayton
to review in RMBS groups were rejected by Clayton as falling outside the applicable
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underwriting guidelines. Of the mortgage loans that Clayton found defective, 32% of the loans
were subsequently waived in by Merrill Lynch without proper consideration and analysis of
compensating factors.
376. Over the past five years, Merrill Lynchs false representations regarding the
quality and characteristics of the mortgage loans it securitized have been the focus of several
significant RMBS individual and class actions. For example, on September 2, 2011, the FHFA
filed suit against Merrill Lynch in connection with 72 Merrill Lynch-sponsored or underwritten
securitizations, including 16 of the Merrill Lynch-label Trusts.
19
FHFA v. Merrill Lynch & Co.,
Inc. et al., No. 11-cv-06202 (S.D.N.Y. Sept. 2, 2011). The FHFAs review of at least 1,000
randomly selected mortgage loans from each trust revealed that for each securitization Merrill
Lynch understated the percentage of non-owner-occupied properties by more than 6 percent, and
for some securitizations by more than 10 percent. In addition, the percentage of mortgage loans
with an LTV ratio over 100 percent was over 10% in 63 of 72 securitizations, and for 20
securitizations over 20% of the mortgages had a true LTV ratio over 100%.
20

377. The FHFAs findings of systemic and pervasive breaches of representations and
warranties by both Merrill Lynch and the originators that supplied the loans for Merrill Lynch-
label Trusts are supported by several other loan-level analyses conducted by investors in other
actions. See, e.g., Allstate v. Merrill Lynch, Index No. 650559/2011 (the high breach rates found
within MLMI 2005-A2, MLMI 2006-RM1, MLMI 2006-RM5, MLMI 2006-WMC2, SURF

19
These Merrill Lynch-label Trusts are the following: MLMI 2005-A8, MLMI 2006-FF1, MLMI
2006-FM1, MLMI 2006-HE6, MLMI 2006-MLN1, MLMI 2006-RM1, MLMI 2006-RM5,
MLMI 2006-WMC2, SURF 2006-AB3, SURF 2006-BC1, SURF 2006-BC2, SURF 2006-BC3,
SURF 2006-BC4, SURF 2006-BC5, SURF 2007-AB1, and SURF 2007-BC1.
20
The FHFAs loan-level review also found alarming breach rates in OWNIT 2006-4 and
OWNIT 2006-6, securitizations sponsored by Ownit Mortgage which are also the subject of this
action.
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2006-BC2 and SURF 2006-BC3 was strong evidence that Merrill actually knew the pool was a
toxic mix of loans given to borrowers that could not afford the properties, and thus were highly
likely to default.); Prudential v. Bank of America, No. 13-cv-01586 (forensic analysis of MLMI
2006-HE2, MLMI 2006-MLN1, MLMI 2007-HE3, SURF 2006-BC1, SURF 2006-BC2 and
SURF 2007-BC1 demonstrated that originators systematically abandoned its underwriting
guidelines); AIG v. Bank of America, No. 652199/2011 (concluding that Merrill Lynch made
systemic misrepresentations regarding LTV, CLTV, and owner-occupancy with respect to the
loans securitized in MLMI 2006-HE3).
8. Bear, Stearns & Co., Inc.
378. Bear Stearns, through its affiliates, sponsored more than $20 billion of the loans
in twenty-eight Trusts. Although the Bear Stearns-label Trusts were marketed to investors as
conservative, AAA credit rated investments, it was clear by January 1, 2009 that the underlying
loan collaratal for these Trusts were not of the same credit quality as represented. Specifically,
over 20% of the loans within the Bear Stearns-label Trusts were delinquent, and the Trusts had
written off more than $261 million. By January 2011, collateral losses across these trusts
increased by approximately 60% to $421 million. As of June 2014, the Bear Stearns-label Trusts
have suffered collateral losses of over $665 million.
379. Bear Stearns poor securitization practices have been well publicized through
government reports and private investor and insurer RMBS litigation. Bear Stearns ultimate
goal was to securitize and sell as many loans to RMBS trusts as possible, by whatever means
necessary, even if this meant sacrificing quality. As Jo-Karen Whitlock, Senior Vice President of
Conduit Operations for EMC Mortgage LLC (EMC) wrote in an April 4, 2006 email, [I]f we
have 500+ loans in this office we MUST find a way to underwrite them and buy them . . . I was
not happy when I saw the funding numbers and I knew that NY would NOT BE HAPPY. I
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expect to see 500+ each day . . . Ill do whatever is necessary to make sure youre successful in
meeting this objective.
380. Likewise, the FCIC Report noted that Ruhi Maker, a lawyer who worked on
foreclosure cases at the Empire Justice Center in Rochester, New York, told Fed Governors
Bernanke, Susan Bies, and Roger Ferguson in October 2004 that she suspected that some
investment banks she specified Bear Stearns and Lehman Brothers were producing such bad
loans that the very survival of the firms was put in question. . . . She urged the Fed to prod the
Securities and Exchange Commission to examine the quality of the firms due diligence;
otherwise, she said, serious questions could arise about whether they could be forced to buy back
bad loans that they had made or securitized. FCIC Report at 15-16.
381. Similarly, the NCUA filed two suits against Bear Stearns on behalf of failed credit
unions, alleging that the company, as sponsor, made numerous misrepresentations and omissions
of material facts in the offering documents of the securities sold to the failed corporate credit
unions. See Natl Credit Union Admin. Bd. v. Bear, Stearns & Co. Inc., 12-cv-2781 (D. Kan. Dec.
14, 2012); Natl Credit Union Admin. Bd. v. Bear, Stearns & Co. Inc., No. 13-cv-6707 (S.D.N.Y.
Sept. 23, 2013). The complaints alleged that Bear Stearns abandoned underwriting guidelines
and securitized loans that were destined from inception to perform poorly. NCUA Sues J.P.
Morgan and Bear, Stearns over $3.6 Billion in Faulty Securities, NCUA Press Release (Dec. 17,
2012). J.P. Morgan settled such claims against Bears Stearns, and other J.P. Morgan affiliates, for
$1.4 billion in November 2013.
382. On August 21, 2013, JPMorgan agreed to settle a lawsuit brought by bond-insurer
Assured regarding misrepresentations by Bear Stearns as sponsor of a securitization for an
undisclosed amount. In the complaint, Assured alleged that Bear Stearns concealed the
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incredibly high breach rates uncovered through the sparse quality control it performed between
2002 and September 2005, which had revealed underwriting defects in 43 percent of the
GreenPoint loans reviewed by Bear Stearns own third-party quality control vendor. Assured
Guaranty Corp. v. EMC Mortgage LLC, et al., Index No. 650805/2012 (N.Y. Sup. Ct. Mar. 15,
2012) Compl. 14.
383. In a similar suit brought by Ambac Assurance Corporation against Bear Stearns,
the court filings identified multiple emails among Bear Stearns employees that indicated the
company knew the loans it was securitizing were defective. Bear deal manager Nicolas Smith
wrote an e-mail on August 11th, 2006 to Keith Lind, a Managing Director on the trading desk,
referring to a particular bond, SACO 2006-8, as SACK OF SHIT [2006-]8 and said, I hope
your [sic] making a lot of money off this trade. E-mails Suggest Bear Stearns Cheated Clients
Out of Billions, The Atlantic, January, 25, 2011. Jeffrey Verschleiser even said in an e-mail that
he knew this [due diligence] was an issue. He wrote to his peer Mike Nierenberg in March 2006,
[we] are wasting way too much money on Bad Due Diligence. Yet a year later nothing had
changed. In March 2007, Verschleiser wrote to Nierenberg again about the same due diligence
firm, [w]e are just burning money hiring them. Id.
384. In Syncora Guarantee Inc. v. J.P. Morgan Securities LLC, the plaintiff alleged
that: After observing this initial performance deterioration, Syncora retained an independent
third-party consultant to reunderwrite samples of the securitized loans. The consultant performed
loan-level analyses of 1,431 mortgage loans in the Transaction, with an outstanding principal
balance of $131 million. The results evidence a staggering 92% overall breach rate. The 1,431
loans reviewed include 400 that Syncoras consultant randomly selected, regardless of their
payment status, which had an outstanding principal balance of $28 million. The findings on the
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random sample were astounding; 85.5% of these random loans breached one or more of the
contractual warranties that EMC had made to Syncora. Syncora Guarantee Inc. v. J.P. Morgan
Securities LLC f/k/a Bear, Stearns & Co. Inc., Index No. 651566/2011 (N.Y. Sup. Ct. June 6,
2011) Compl. 7.
385. Investors forensic analysis of loans within the Bear Stearns-label Trusts have
corroborated the above-described allegations of Bear Stearns abusive securitization practices
and provide further evidence that Bear Stearns breached its representations and warranties to
each of the Bear Stearns-label Trusts. For example, in Prudential Ins. Co. of Am. v. JPMorgan
Sec. LLC et al., No. 12-cv-03489 (D.N.J. Aug. 30, 2012), Prudential conducted a forensic
analysis of loans in seven Bear Stearn-label Trusts at issue here: BSABS 2004-HE11, BSABS
2004-HE5, BSABS 2004-HE7, BSABS 2004-HE8, BSABS 2004-HE9, BSABS 2004-FR3, and
BSABS 2004-HE6. The loan-level analysis revealed that Bear Stearns representaitons and
warranties regarding the owner-occupancy were false, as Bear Stearns had overstated the
percentage of owner occupancy by approximately 10% or more for each securitization.
Prudential also found that these Bear Stearns-label Trusts had a much greater percentage of the
loans with CLTVs higher than 90% and 100% than Bear Stearns represented. Prudential
concluded that the consistency and size of these misrepresentations [] confirms that the
abandonment of sound underwriting practices was systematic.
386. Similarly, in Texas County Dist. Ret. v. J.P. Morgan, No. 1-GN-14-000998,
plaintiff conducted a forensic review of loans within BSARM 2004-8, and found that Bear
Stearns had understated the number of loans with an LTV ratio exceeding 80% by nearly 48
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percentage points, and loans with an LTV ratio exceeding 100% by nearly 12 percentage
points.
21

387. On November 15, 2013, JPMorgan announced that it had reached a $4.5 billion
agreement with an institutional investor group to settle, among other things, mortgage repurchase
claims for 330 RMBS trusts issued by JPMorgan, Bear Stearns and Chase. Many of the trusts
are of the same vintage and label as Bear Stearns-sponsored Trusts at issue. Notably, this
settlement was reached two years after the institutional investor group requested the trustees for
the Trusts, including U.S. Bank, to open an investigation into potential mortgage repurchase and
servicing claims held by the RMBS Trusts on December 15, 2011, and subsequent to the trustees
obtaining forbearance agreements on mortgage repurchase claims for these Trusts.
388. As noted above, on November 19, 2013, the DOJ announced its $13 billion
settlement with JPMorgan, wherein JPMorgan acknowledged it made serious misrepresentations
to the investing public about certain RMBS transactions. Significantly, 64 of the Bear Stearns-
label Trusts were the subject of this settlement.
9. RBS
389. The Royal Bank of Scotland Group PLC (RBS), through its affiliates RBS
Financial Products, Inc. (f/k/a Greenwich Capital Financial Products, Inc.) and Soundview,
sponsored more than $15 billion in mortgage loans securitized in 11 of the Trusts. Given the
poor performance of the RBS-Trusts, it was clear by January 1, 2009 that RBS and materially

21
Investors forensic reviews of loans within Trusts that Bear Stearns served in the lead
underwriter capacity have also revealed pervasive and systemic breaches. See, e.g., Sealink
Funding v. Bear Stearns, No. 652681-2011 (N.Y. Sup. Ct.) (plaintiffs review found that Bear
Stearns percentage understatement of non-owner occupied loans in AABST 2005-5 was 278%,
and that contrary to Bear Stearns representation 14% of the loans in SGMS 2006-FRE2 had
LTVS exceeding 100%).
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and adversely breached representations and warranties to the Trusts. For example, at this time,
over 31% of the RBS-Trusts loans were delinquent. Moreover, the RBS-Trusts had suffered
collateral losses in excess of $140 million. Realized losses increased nearly 4.5 times by January
2011 to $607 million. As of June 2014, the RBS-label Trusts have suffered collateral losses of
over $1.8 billion.
390. RBSs poor mortgage securitization practices have been the subject of
government investigations, reports and significant RMBS investor lawsuits. The FCIC Report
noted that Clayton acted as a due diligence provider for RBSs RMBS offerings. According to
testimony provided to the FCIC, for the loans Clayton tested for the RBS from at least January 1,
2006 through June 30, 2007, Clayton informed RBS that at least 18.4% of the loans it tested did
not comply with the underwriting guidelines, did not have compensating factors otherwise
meriting approval, and/or had defective appraisals. Notwithstanding being informed of this, the
RBS then knowingly and deliberately waived well over half of those defective loans (53.3%)
into their RBS Offerings. The FCIC Report further reported that at the same time RBS was
selling loans to the Trusts, it was selling RMBS short, including their own securitizations.
Specifically, RBS received $1.1 billion in payments from AIG and AIG-related entities alone for
their shorting activities.
391. In FHFA v. Royal Bank of Scotland Group PLC, et al., No. 11-cv-01383 (Dist.
Conn. Sept. 2, 2011), the FHFA performed a forensic analysis of sixty-eight RBS-sponsored
securitizations and/or RBS-underwritten securitizations, including 5 RBS-label Trusts at issue
here: HVMLT 2005-12, HVMLT 2005-13, HVMLT 2005-16, HVMLT 2006-1, and HVMLT
2006-4. The FHFA found that at least 3.12 percent of the mortgage loans for each
Securitization had an LTV ratio over 100 percent, and for most Securitizations this figure was
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much larger. Amended Compl. 113. The FHFA also found that the Prospectus Supplement
for each Securitization was grossly inaccurate, understating the percentage of non-owner
occupied properties by at least six percent, and for many Securitizations by ten percent or more.
Amended Compl. 107.
392. On January 19, 2012, CUNA Mutual Group sued RBS Securities Inc., seeking a
rescission of 15 certificates in 10 separate RMBS offerings CUNA Mutual bought from RBS
before the financial crisis hit, including RBSGC 2005-A, a Trust at issue. Before filing the suit,
CUNA Mutual commissioned a forensic investigation of the loan pools collateralizing the 10
RMBS to test the accuracy of RBS's quantitative representations. CMFG Life Ins. Co. v. RBS
Sec. Inc., No. 12-cv-00037 (W.D. Wis. Jan. 17, 2012) CUNA Mutual analyzed 17,947 loans from
the RMBS transactions or about 40% of all the loans in the pools. The results of CUNA
Mutuals forensic investigation revealed that RBSs quantitative representations in the offering
documents of all 10 RMBS were false at the time they were made.
22

393. A host of other forensic analyses of RBS securitizations have confirmed RBSs
widespread breach of its representations and warranties to the Trusts. See, e.g., Royal Park v.
RBS, No. 653541/2013 (N.Y. Sup. Ct. Oct. 11, 2013) (forensic review of HVMLT 2005-1,
HVMLT 2005-13, HVMLT 2005-16, HVMLT 2006-1 and HVMLT 2006-4 demonstrated
pervasive breaches of representations and warranties concerning compliance with underwriting
guidelines, owner occupancy, LTV ratios and assignment of title); Texas County Dist. Ret. v. J.P.
Morgan, No. 1-GN-14-000998 (plaintiffs forensic review of HVMLT 2005-1 and HVMLT

22
In a separate action, CMFG Life Ins. Co. v. Banc of America, No. 13-cv-00579 (W.D. Wis.
Aug. 15, 2013), CUNAs loan level analysis revealed systemic seller breaches of representations
and warranties in STALT 2005-1F, which is also a Trust at issue in this case.
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2005-16 proved that the lien data, owner-occupancy statistics, and loan-to-value ratios reported
by RBS were materially misstated).
10. C-BASS
394. C-BASS was a mortgage investment and servicing company that specialized in
the purchase and securitization of subprime mortgages. C-BASS sponsored over $11 billion in
mortgage loans sold and securitized to twenty-one Trusts, a high percentage of which were
defective. By January 1, 2009, it became clear that the C-BASS-label Trusts were afflicted by
pervasive breach of representations and warranties made by C-BASS and the originators that
supplied the loans for securitizations. At this point, the C-BASS Trusts averaged delinquencies
of over 35%. To date, the C-BASS Trusts have incurred losses of over $2.8 billion in realized
losses.
395. C-BASS did not originate loans, but instead served as Sponsor of
securitizations, often purchasing and securitizing loan pools originated by originators notorious
for failing to adhere to underwriting guidelines. Indeed, Fitch Ratings described C-BASSs
general business strategy of as one that targeted investment in scratch and dent sub-performing
and nonperforming whole loans, subprime whole loans, subordinate RMBS and servicing rights .
. . Similarly, the American Banker described C-BASS as a firm best known for buying
scratch-and-dent home loans. Scratch-and-dent loans are loans or mortgages that have one
or more combination of defects stemming from originations made outside a lenders
implemented credit guidelines, deficiencies in loan documentation, errors made in following
regulatory compliance laws, irregular payment history or borrower defaults.
396. As a significant underwriter of RMBS, C-BASS was a customer of Clayton and
its due diligence services. Clayton found that 29% of the total loans underwritten by C-BASS
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failed to meet the underwriting standards, but that C-BASS waived its right to reject 43% of
these non-conforming loans, and included them in the RMBS it securitized anyway.
397. Investor lawsuits have similarly shined the light on C-BASSs faulty
securitization practices during the 2004 through 2007 timeframe. In its Amended Complaint
filed on March 18, 2010, in Fulton County Employees Retirement System v. MGIC Investment
Corporation, No. 08-cv-00458 (E.D. Wisc. May 22, 2008), a securities fraud class action against
MGIC, a controlling shareholder of C-BASS, the class plaintiffs quoted several former senior
executives of C-BASS confirming C-BASSs flawed due diligence practices, including a senior
forensic underwriting analyst at C-BASS from 2004 until mid-2008 charged with reviewing
defaulted loans, who stated that of the defaulting loans sent to her department, she estimated
that 75% of those were fraudulent. Similarly, a Due Diligence Underwriter Contractor for C-
BASS from 2004 through 2007 stated from about 2004 on forward through the 2005 2007
timeframe, the quality of loans was falling and consequently the risk component was rising. He
explained that occasionally he would find pools of loans that were all very poor, and that it
looked like they [C-BASS] were just slapping loans together. He recalled that in some cases the
pools were so bad that 80% to 90% of the loans in the pool were no good, noting that the
continued decrease in underwriting guidelines [loan quality] resulted from a decrease in the
integrity of the seller/originator, such as Countrywide. (Bracketed terms in original.)
398. Similarly, in FHFA v. Barclays Bank PLC et al., No. 11-cv-06190 (S.D.N.Y. Sept.
2, 2011), FHFA alleged systemic misrepresentations regarding occupancy status, LTV and CLTV
ratios and chain of title representations in connection with, among other things, the underlying
loans for two C-BASS-label Trusts, CBASS 2006-CB1 and CBASS 2007-CB2. FHFA
determined that CBASS had understated non-owner occupied properties by 7.5% and 11.14% for
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these Trusts, respectively. FHFA also determined that 12% of the sample of loans included in the
data review for CBASS 2006-CB1 and 29% for CBASS 2007-CB2 had LTV ratios above 100
percent. Moreover, the FHFA reviewed 100 loan files from CBASS 2007-CB2, and determined
that at least 83% of the reviewed loans were not underwritten in accordance with the
underwriting guidelines. The FHFAs complaint described specific defective loans where had the
loan underwriter performed a reasonableness test, the unreasonableness of the borrowers stated
income would have been evident.
399. Investors loan-level reviews in other actions have further confirmed the existence
of widespread breaches within the C-BASS-label Trusts. For example, in FHFA v. JPMorgan
Chase & Co. et al., 11-cv-06188 (S.D.N.Y. Sept. 2, 2011), an initial forensic review of 100 loan
files for loans in CBASS 2006-CB7 revealed that approximately 79% of the reviewed loans were
not underwritten in accordance with the underwriting guidelines or otherwise breached the
representations contained in the transaction documents. Similarly, in IKB International v.
JPMorgan Chase & Co., No. 12-cv-04617 (S.D.N.Y. June 13, 2012), the plaintiff determined
that contrary to C-BASS representation that no loans would have an LTV/CLTV ratios exceeding
100%, over 34% of the sampled loans had CLTV/LTV over 100%. See also, In re Countrywide
Fin. Corp., No. 11-ml-02265-MRP (loan-level review of CBASS 2007-CB4 revealed CBASS
materially misrepresented [LTV/CLTV ratios] and the rates of owner-occupancy for the various
pools of loans purportedly underlying the Securitization[].);Prudential v. Goldman Sachs, No.
2:12-cv-06590 (forensic review of CBASS 2006-CB9 indicated the systemic abandonment of
underwriting standards and the resulting inclusion of highly risky or outright fraudulent
Mortgage Loans.); Texas County Dist. Ret. v. J.P. Morgan, No. 1-GN-14-000998 (finding that
11.65% of the loans reviewed from CBASS 2006-CB9 had an LTV greater than 100%).
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11. Morgan Stanley
400. Morgan Stanley & Co., Inc. (Morgan Stanley), through its affiliates Morgan
Stanley Mortgage Capital, Inc. and Saxon Capital, Inc., sponsored more than $16 billion in
mortgage loans securitized in twenty-five Trusts. By January 1, 2009, it was evident that the
Mortgan Stanley Trusts loan pools were heavily populated with toxic loans. At this time, more
than 28% of the loans within these Trusts were delinquent. Notably 10 of the Morgan Stanley-
label Trusts had delinquency rates in excess of 30%, including MSM 2006-8AR and MSM 2006-
6AR where more than half of the loans within these securitizations were delinquent. Moreover,
these trusts collateral losses were in excess of $250 million. As of June 2014, the Morgan
Stanley-label Trusts have suffered collateral losses of more than $2.5 billion.
401. According to the FCIC, Morgan Stanley devoted minimal resources to due
diligence on the loans it securitized. For instance, the head of due diligence was based not in
New York but rather in Boca Raton, Florida, and he had, at any one time, only two to five
individuals reporting to him directlyand they were actually employees of a personnel
consultant, Equinox. FCIC Report at 168.
402. Internal Clayton documents show that a startlingly high percentage of loans
reviewed by Clayton for Morgan Stanley were defective, but were nonetheless included by
Morgan Stanley in loan pools sold to the Trusts. According to Claytons data 37% (or 23,154) of
the 62,940 loans that it reviewed for Morgan Stanley failed to conform to Morgan Stanley's
stated underwriting standards. Of the 37% of loans identified by Clayton as non-compliant,
Morgan Stanley waived in 56% (or 20% of the total pool), including the toxic loans in the
Trusts securitization pools.
403. Government investigations and lawsuits involving Morgan Stanley-sponsored
offerings exposed the consequences of its poor due diligence. For example, in 2010, Morgan
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Stanley was forced to pay $102 million to settle the claims asserted by the Massachusetts
Attorney General and agree to drastic changes in its underwriting practices. Id. at 45-52;
FCIC Report at 226. Similarly, in FHFA v. Morgan Stanley, a forensic review conducted by the
FHFA of 210 loans from the MSM 2007-2AX and SAST 2007-1 securitizations revealed that
approximately 93% of the reviewed loans had not been underwritten in accordance with the
applicable underwriting guidelines. FHFA v. Morgan Stanley et al., No.11-cv-6739 Amended
Compl. 112 (S.D.N.Y. June 13, 2012). During an 18-month period ending June 31, 2007,
Clayton, rejected 16% of the loans it reviewed for Morgan Stanley. This information was
provided to Morgan Stanley, but it overruled Claytons findings and waived in approximately
56% of those loans. (See Clayton All Trending Report at 8, available at
http://fcic.law.stanford.edu/hearings/testimony/the-impact-of-the-financial-crisissacramento#
documents.) FHFA v. Morgan Stanley, No. 11-cv-6739, Amended Compl. 201.
404. Lawsuits involving many of the Morgan Stanley-label Trusts illuminating Morgan
Stanleys pervasive and systemic securitization abuses provide further evidence that Morgan
Stanley severely breached representations and warranties to the Morgan Stanley-label Trusts.
For example, on Feburary 13, 2013, the NCUA filed a highly detailed complaint against Morgan
Stanley asserting Morgan Stanley made misrepresentations in connection with the underwriting
and subsequent sale of RMBS from MSM 2006-16AX, MSM 2006-3AR, MSM 2006-8AR,
MSM 2007-11AR, and MSM 2007-5AX. In particular, the NCUA alleged that originators and
Morgan Stanely systematically abandoned the stated underwriting guidelines in the offering
documents, with the result that the securities were significantly riskier than represented.
Similarly, in Western and Southern Life Insurance Company et al. v. Morgan Stanley Mortgage
Capital, Inc. et al., No. 11-cv-00576 (S.D. Ohio Aug. 22, 2011), the plaintiff made nearly
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identical allegations of Morgan Stanleys widespread breaches of representations and warranties
with respect to MSM 2006-11, MSM 2006-12XS, MSM 2006-17XS and MSM 2007-3XS.
IX. U.S. BANK KNEW THAT THE TRUSTS
WERE FILLED WITH DEFECTIVE LOANS
405. There is ample evidence that beginning in 2009 and by 2011, U.S. Bank
discovered that each of the Trusts loan pools contained high percentages of mortgage loans
that materially breached the originators and sponsors representations and warranties regarding
their credit quality. As discussed above, since 2009 there has been a steady stream of public
disclosures regarding the originators systemic underwriting abuses and the sponsors faulty
securitization practices. However, apart from the highly publicized government investigations,
reports and enforcement actions, as well as high profile RMBS litigation involving the
originators and sponsors, as explained below there is a plethora of additional evidence
demonstrating U.S. Banks and its responsible officers knowledge that the Trusts loan pools
contained high percentages of mortgage loans that materially breached seller representations and
warranties.
A. The Trusts Poor Performance
406. U.S. Bank and its responsible officers had discovered by 2009 that the Trusts
loan pools were afflicted by severe and pervasive breaches of seller representations and
warranties by virtue of the Trusts abject performance. It was evident by January 2009 that given
the extremely high mortgage loan default rates within the Trust loan pools the mortgage loans
sold to the Trusts were not as the sellers had represented and warranted. For example, IXIS
2007-HEI suffered more than $385.7 million in losses (48.5%). And, approximately 26.2% of
the remaining balance is 90 days or more delinquent. LXS 2007-811 incurred more than $499
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million in losses (46%) and over 31.3% of the remaining balance is 90 days or more delinquent
as of March 11, 2014.
407. As of March 11, 2014, the Trusts on average reported realized losses, including
losses from delinquent loans in bankruptcies, foreclosures, and real estate owned or REOs
(collectively Delinquencies), of approximately $122.1 million. The average Delinquencies
rate for the Trusts is reflected in the chart below:

408. These high losses and delinquency rates, known to U.S. Bank through the
monthly Service Reports and Trustee Remittance Reports, indicated, along with the facts detailed
above, that the underlying mortgage loans in the Trusts systemically breached the sellers
represented and warranted. By about July 2008, the first harbingers of the violations of the
representations and warranties regarding the credit quality of the loans started to appear. The
Trustees monthly reports started to show increases in the trends of loan delinquencies, and by
January 2009 these trends had become pronounced.
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409. U.S. Bank was also provided regular reports regarding loan modifications granted
by the servicers to borrowers that failed to timely make principal and interest payments on their
loans to the Trusts. In general, loan modifications change the terms of the original mortgage
contract agreed to by the lender and borrower, typically to ease the borrowers monthly payment
obligation so the borrower may remain current and avoid default. Loan modifications often
include changes to the loans interest rate, term, and/or outstanding principal. As with
delinquency rates, the extent of loan modifications is indicative of breaches of representations
and warranties for at least two reasons. First, escalating loan modifications correlate to misstated
borrower income and creditworthiness. Second, the servicers decisions to modify rather than
foreclose on loans indicates that the underlying collateral is not adequate security to satisfy the
outstanding balance because the original LTV ratio (or CLTV ratio) was not as represented
because the appraised property value was misstated and additional liens encumbered the
mortgaged property.
410. As indicated below, loan modifications in the Trusts dramatically increased
beginning in early 2009, providing U.S. Bank further information regarding the systemic
breaches of representations and warranties in the Trusts:
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B. Credit-Rating Downgrades Of The
Certificates Further Supports The Sellers Problems
411. At the time of securitization, all of the Trusts senior tranches were rated
investment grade. Bond rating firms, such as Standard & Poors, use different designations
consisting of upper- and lower-case letters A and B to identify a bonds credit quality rating.
AAA and AA (high credit quality) and A and BBB (medium credit quality) generally
are considered investment grade. An investment grade rating signifies that the bond has a
relatively low risk of default and are judged by the rating agencies as likely to meet payment
obligations such that banks and institutional investors are permitted to invest in them. Credit
ratings for bonds below investment grade designations (i.e., BB, B, CCC, etc.) are
considered low credit quality, and are commonly referred to as junk bonds.
412. However, as public disclosures revealed the originators and sponsors systemic
underwriting and securitization abuses and U.S. Bank began reporting severe collateral losses in
the performance of the mortgage loans in the Trusts, the Trusts certificates credit ratings were
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drastically downgraded. By December 31, 2009, 71% of the senior tranches in the Trusts served
as trustee had been downgraded at least once. Across all Trusts, over 80% of all certificates had
been downgraded by at least one ratings agency. Further, over 50% of the senior certificates had
been downgraded to junk bond status.
C. U.S. Bank Discovered Widespread Seller Breaches Of
Representations And Warranties In Its Capacity As Servicer
413. In addition to acting as a trustee, U.S. Bank was among the largest mortgage loan
servicer to both the RMBS industry during the relevant period. Indeed, U.S. Banks master
servicing portfolio includes approximately 45,700 loans with an unpaid principal balance of
approximately $6 billion as of January 2014. Many of these loans were originated and sponsored
by the same mortgage loan sellers to the Trusts. In connection with servicing these loan sellers
loans, U.S. Bank was in a front row seat to view mortgage loan sellers abusive underwriting and
securitization practices. For example, as servicer to these other RMBS trusts containing loan
pools originated and securitized by the same mortgage loan sellers to the Trusts, U.S. Bank
prepared monthly reports for the trustees dealing the similarly poor performance of these loan
pools. Additionally, as servicer, U.S. Bank knew of the credit agencies similar downgrading of
these trusts as result of the poor credit quality of these same originators and sponsors loan
pools. Further, in servicing and administrating the loans, including during the modification
process, U.S. Bank examined the loan files of mortgage loans originated and sponsored by these
entities and in the process discovered systemic and pervasive breaches of representations and
warranties in the loan pools.
414. Because the problems U.S. Bank discovered regarding these common originators
and sponsors in its capacity as servicer to other RMBS trusts revealed systemic and pervasive
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violation of underwriting and securitization guidelines, U.S. Bank knew that these same
defective underwriting and securitization practices applied to the Trusts.
D. U.S. Bank Received Written Notice Of
Pervasive And Systemic Seller
Breaches From Financial Guaranty Insurers
415. U.S. Bank discovered that each of the Trusts loan pools contained high
percentages of mortgage loans that materially breached the originators and sponsors
representations and warranties regarding their credit quality through its involvement in financial
guaranty insurer litigation involving these same originators and sponsors in its capacity as either
trustee or master servicer of these RMBS trusts.
416. Financial guaranty insurers provided financial guaranty insurance for the RMBS
issued from many of the Trusts. Under the governing agreements for these insured RMBS
transactions, the mortgage loan sellers to the Trusts made numerous representations and
warranties concerning the attributes of the loans and the practices pursuant to which they were
originated. The governing agreements for the insured RMBS transactions also create a
repurchase protocol pursuant to which the monoline insurers must provide notice of a breach of
representation and warranty to the responsible mortgage loan seller and the parties to the
agreement (including the Trustee) in order to compel the responsible mortgage loan seller to
repurchase loans that breach the representations and warranties.
417. In the aftermath of the financial crisis, monoline insurers have initiated at least 10
lawsuits against responsible mortgage loan sellers for breach of their representations and
warranties in connection with other RMBS trusts to which U.S. Bank serves either as Master
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Servicer or Trustee.
23
Prior to filing suit against the originators and/or sponsors, the monoline
insurers (unlike certificateholders) were often able to obtain access to the specific loan files or
conduct a forensic loan level review of the loans, which showed systemic and pervasive breaches
of the representations and warranties in securitizations with the same sponsors to the Trusts (e.g.,
Bank of America, Bear Stearns, Credit Suisse, First Franklin, UBS and Morgan Stanley); same
RMBS labels; same RMBS shelves; same vintage; same loan product type; and/or the same
originators (e.g., Countrywide, GreenPoint, and DLJ).
418. Plaintiffs are informed and believe that consistent with the repurchase protocol
under the Trusts governing documents, U.S. Bank was notified by both the responsible mortgage
loan sellers and the parties to the PSAs (including Wells Fargo as Master Servicer) of these
sellers systemic and pervasive breaches of representations and warranties.
419. The monoline insurers findings from loan level reviews set forth both in their
breach notices and subsequent publicly available lawsuits made U.S. Bank and its responsible
officers aware of the systemic violation of underwriting and related standards in the mortgage
securitization industry between 2004 and 2008 vintage, as well as informed them of specific
originators and sponsors systemic and pervasive practice of misrepresenting the credit quality
and characteristics of the mortgage loans they were selling to keep the RMBS machine running.

23
See, e.g., CIFG Assurance North America, Inc. v. Bank of America, N.A. et al., No.
654028/2012 (N.Y. Sup. Ct.); Assured Guaranty Corp. v. EMC Mortgage LLC, No. 1:12-cv-
01945 (S.D.N.Y.); Assured Guaranty Municipal Corp. v. DLJ Mortgage Capital, No.
652837/2011 (N.Y. Sup Ct.); Ambac Assurance Corp. et al. v. First Franklin et al., No.
651217/2012 (N.Y. Sup. Ct.); U.S. Bank National Association v. GreenPoint Mortgage Funding,
Inc., No. 600352/2009 (N.Y. Sup. Ct.); MBIA Insurance Corp. v. Credit Suisse Securities (USA),
LLC et al. , No. 603751/2009 (N.Y. Sup. Ct.); Assured Guaranty Municipal Corp. v. UBS Real
Estate Securities Inc., No. 1:12-cv-01579 (S.D.N.Y.); MBIA Insurance Corp. v. Morgan Stanley
et al., No. 29951-10 (N.Y. Sup. Ct.); Financial Guaranty Insurance Co. v. Ally Financial, Inc.,
No. 12-cv-0338 (S.D.N.Y.); Assured Guaranty Municipal Corp. v. DLJ Mortgage Capital, No.
652837/2011 (N.Y. Sup Ct.).
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420. For example, in CIFG v. Bank of America, Index No. 654028/2012, the plaintiff
CIFG, a New York-based monoline insurer, wrote insurance relating to two structured
transactions arranged by Bank of America, which in turn were backed by twenty-two Bank of
America securitizations. CIFG alleged that Bank of America had these securities in its
inventory because it had been unable to sell them when it served as underwriter on the original
RMBS offerings. CIFG claimed that Bank of America knew of the poor quality of the
Mortgage Loans, and knew the unsold Original RMBS were a ticking time bomb on the banks
books. According to CIFG, Bank of America, unable to sell the securities in pieces, then
hatched a new plan of financial engineering, repackaged the bonds, and induced CIFG to
provide more than $150 million in insurance to make them marketable to investors. CIFG
alleged that Bank of America gave it garbage data that made the loans and the certificates they
backed appear less risky than they actually were, including with respect to LTV, CLTV and the
percentage of the mortgages where the property would be occupied by the borrowers.
421. To highlight the falsity of the originators and Bank of Americas representations
and warranties regarding the underlying loans, CIFG revealed the findings of its loan level
analysis of over 31,000 mortgage loans from the twenty-two securitizations showing that a
staggering 64.37% of the mortgage loans contained at least one material defect. A summary of
testimonial and documentary evidence demonstrates widespread breaches of representations and
warranties by each of the major originators of the mortgage loans for those trusts.
422. Because these monoline insurers findings from loan level reviews set forth both
in their breach notices and subsequent publicly available lawsuits reflected these mortgage loan
sellers systemic and pervasive violation of underwriting and securitization guidelines, U.S. Bank
discovered that these same defective underwriting and securitization practices applied equally to
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all of the other Trusts containing loans originated and securitized by these same originators and
sponsors.
E. U.S. Bank And Its Responsible Officers
Repeatedly Received Written Notice From
Certificateholders Of Pervasive And Systemic Seller Breaches
423. U.S. Bank, its capacity as Trustee to many Trusts at issue herein, as well as in its
capacity as trustee to other RMBS trusts that are not the subject of this action but which are
secured by loans originated and sponsored by the very same entities that originated and
sponsored the loans underlying the Trusts at issue herein, has repeatedly received notice from
Certificateholders of pervasive and systemic violations of representations and warranties by the
loan sellers. Based on the sheer volume of the defective mortgage loans identified, together
with the systemic and pervasive faulty origination and securitization practices complained of in
the Certificateholders breach notices, U.S. Bank and its responsible officers knew that the
Trusts loan pools similarly contained high percentages of defective mortgage loans.
424. For example, on October 17, 2011, a group of major institutional mortgage
investors in several dozen RMBS trusts sponsored by Citgroup or its affiliates alleged
widespread violations of representations and warranties contained in the governing agreements
for sixty-eight RMBS trusts sponsored by Citigroup from 2005 to 2008 (the Citibank Putback
Initiative), including sixty of the Trusts at issue herein. The trustees for these Citigroup-
sponsored trusts, which were instructed to investigate these breaches of representations and
warranties, are U.S. Bank, HSBC, and Wells Fargo. On April 7, 2014, Citigroup announced that
it had reached an agreement with the investor group to resolve representation and warranty
repurchase claims. Under the agreement, Citigroup agreed to make a binding offer to the trustees
to pay $1.125 billion to the trusts, plus certain fees and expenses. According to Citigroups press
release announcing the agreement, the sixty-eight trusts covered by the agreement issued in the
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aggregate $59.4 billion of RMBS and represent all of the trusts established by Citi's legacy
Securities and Banking business during 2005-2008 for which Citi affiliates made representations
and warranties to the trusts. The trustees approval of the settlement remains pending.
425. The Citibank Putback Initiative identified and seeks to compel the repurchase of
large quantities of loans (1) originated by many of the same lenders that also originated large
Trusts) and Countrywide ($57 billion of loans sold to the Trusts); and (2) securitized by the same
investment banks and financial institutions that sponsored the Trusts, including Citibank ($23
billion of sponsored Trusts). In addition, the Citibank Putback Initiative identified and seeks
recovery of losses relating to servicing deficiencies by many of the same major servicers of loans
backing the Trusts, including Wells Fargo (original servicer to $331 billion of loans sold to the
Trusts).
426. On December 16, 2011, a group of major institutional mortgage investors in
hundreds of RMBS trusts sponsored by JPMorgan or its affiliates issued written instructions to
Wells Fargo, The Bank of New York Mellon (BNYM), Deutsche Bank, HSBC, and U.S. Bank,
as trustees, to open investigations into large numbers of ineligible mortgages in the loan pools
securing those trusts and deficient servicing of those loans (the JPMorgan Putback Initiative).
The notices covered more than $95 billion of RMBS issued by JPMorgan from 2005 to 2007,
including 179 trusts for which JPMorgan serves as trustee. Less than two years later, U.S. Bank
and the other trustees were presented with a $4.5 billion settlement offer covering 330
JPMorgan-sponsored RMBS trusts. U.S. Banks approval of the JPMorgan Putback Initiative
remains pending despite being presented with the settlement offer over six months ago.
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427. The JPMorgan Putback Initiative identified and seeks to compel the repurchase of
large quantities of loans (1) originated by many of the same lenders that also originated large
Trusts) and Countrywide ($57 billion of loans sold to the Trusts); and (2) securitized by the
same investment banks and financial institutions that sponsored the Trusts, including Bear
Stearns ($20 billion of sponsored Trusts) and Morgan Stanley ($16 billion of sponsored Trusts).
In addition, the JPMorgan Putback Initiative identified and seeks recovery of losses relating to
servicing deficiencies by many of the same major servicers of loans backing the Trusts, including
Wells Fargo (original servicer to $331 billion of loans sold to the Trusts) and JPMorgan (original
servicer to $20 billion of loans sold to the Trusts).
428. On January 31, 2012, a group of major institutional mortgage investors in several
dozen RMBS trusts sponsored by Morgan Stanley or its affiliates issued written instructions to
U.S. Bank, Wells Fargo, and Deutsche Bank, as trustees, to open investigations into large
numbers of ineligible mortgages in the loan pools securing those trusts and the deficient
servicing of those loans (the Morgan Stanley Putback Initiative). The notices covered more
than $25 billion of RMBS issued by Morgan Stanley from 2005 to 2007, including twenty-seven
of the Trusts at issue herein.
429. The Morgan Stanley Putback Initiative identified and seeks to compel the
repurchase of large quantities of loans (1) originated by many of the same lenders that also
originated large quantities of the loans sold to the Trusts, including Wells Fargo ($91 billion of
loans sold to the Trusts) and Countrywide ($57 billion of loans sold to the Trusts); and (2)
securitized by the same investment banks and financial institutions that sponsored the Trusts,
including Morgan Stanley ($16 billion of sponsored Trusts). In addition, the Morgan Stanley
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Putback Initiative identified and seeks recovery of losses relating to servicing deficiencies by
many of the same major servicers of loans backing the Trusts, including Wells Fargo (original
servicer to $331 billion of loans sold to the Trusts) and JPMorgan (original servicer to $20 billion
of loans sold to the Trusts).
430. On January 5, 2012, a group of major institutional mortgage investors in several
dozen RMBS trusts sponsored by Wells Fargo or its affiliates issued written instructions to U.S.
Bank and HSBC, as trustees, to open investigations into large numbers of ineligible mortgages in
the loan pools securing those trusts and the deficient servicing of those loans (the Wells Fargo
Putback Initiative). The notices covered more than $19 billion of RMBS issued by Wells Fargo
from 2005 to 2007, including eighty-eight of the Trusts at issue herein.
431. The Wells Fargo Putback Initiative identified and seeks to compel the repurchase
of large quantities of loans (1) originated by many of the same lenders that also originated large
Trusts) and WMC Mortgage ($10.3 billion of loans sold to the Trusts); and (2) securitized by the
same investment banks and financial institutions that sponsored the Trusts, including Wells Fargo
($60.6 billion of sponsored Trusts). In addition, the Wells Fargo Putback Initiative identified and
seeks recovery of losses relating to servicing deficiencies by many of the same major servicers of
loans backing the Trusts, including Wells Fargo (original servicer to $331 billion of loans sold to
the Trusts).
432. U.S. Bank received a letter dated April 10, 2012, regarding MASTR Adjustable
Rate Mortgages Trust 2006-OA1 from counsel representing FHFA entitled Request to Institute
Action, Suit, or Proceeding. By this letter, the FHFA formally requested that U.S. Bank,
institute an action, suit, or proceeding in its own name in its capacity as Trustee under the PSA
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against UBS [as seller] for breaching representations and warranties concerning the mortgage
loans and for failing to repurchase the mortgage loans at a price equal to the purchase price.
433. In addition to the above letter, the FHFA sent U.S. Bank (as trustee) and Wells
Fargo (as Master Servicer) a second letter regarding the same offering entitled Notice of Master
Servicer Event of Termination (hereinafter the Notice). In this Notice, the FHFA informed
U.S. Bank, as the trustee, that the Master Servicer, Wells Fargo, had failed to observe and
perform its duties under the PSA, including, among other things, to mitigate losses experienced
by the Trust from breaches of representations and warranties. Despite receiving the FHFAs
Notice and request, U.S. Bank failed to adequately protect the interests of the Trusts at issue in
this action.
434. On May 14, 2012, a group of major institutional mortgage investors in several
hundred RMBS trusts sponsored by ResCap or its affiliates reached agreement with ResCap and
its affiliated debtors to resolve claims for breaches of representations and warranties concerning
large numbers of loans in the pools securing those trusts (the ResCap Putback Initiative). The
settlement covered more than $320 billion of RMBS largely issued between 2004 and 2008,
including 127 trusts for which U.S. Bank serves as trustee. The trustees for these ResCap-
sponsored trusts, which were aware of the repurchase and servicing claims through, among other
things, the bankruptcy proceedings, are U.S. Bank, Wells Fargo, Deutsche Bank, and BNYM.
435. The ResCap Putback Initiative identified and sought to compel the repurchase of
large quantities of loans originated by many of the same lenders that also originated large
Trusts).
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436. Despite U.S. Banks actual notice of widespread loan defaults and breaches, as the
examples above illustrate, U.S. Bank failed to act in accordance with its obligations under the
governing agreements and TIA to enforce the originators and sponsors obligations to cure,
substitute or repurchase defective mortgage loans.
F. U.S. Bank Selectively Asserted The
Trusts Repurchase Rights Against The Sellers
437. U.S. Banks knowledge of pervasive breaches of representations and warranties
by the originators and sponsors at issue herein is also demonstrated by its own actions in 2009.
For example, in 2008, Lehman, a major sponsor for the Trusts filed for bankruptcy. In
September 2009, U.S. Bank filed claims in the bankruptcy action against Lehman for breaches of
representations and warranties of more than $1 million mortgage loans included in the Lehman
RMBS, including all of the loans in 138 of the Trusts at issue here. U.S. Bank made this claim
even though Lehman was not liable for all of the mortgage loans in most of those Trusts, and in
fact there were many other solvent originators to those Trusts who had made representations and
warranties for those mortgage loans and were thus liable for them. U.S. Banks omnibus claim
for breach of representations and warranties as to all of the mortgage loans in all of those Trusts,
including for mortgage loans that Lehman was not even potentially liable for, and in fact other
originators were, demonstrates U.S. Banks knowledge of pervasive breaches by all of the
originators to those Trusts. Nonetheless, U.S. Bank has not pursued any of those originators to
enforce representation and warranty claims as to the thousands of breaching mortgage loans in
those Trusts.
24

24
Given that U.S. Bank filed claims against Lehman in the bankruptcy case for 138 Trusts,
Plaintiffs do not allege that U.S. Bank breached the governing agreements by failing to make
representation and warranty claims against Lehman for the Trusts. However, Plaintiffs do allege
that U.S. Bank breached the governing agreements by failing to make representation and
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G. U.S. Bank Initiated Putback
Litigation Against Many Of The Sellers
438. U.S. Bank participated in at least twenty-eight actions to enforce putback rights
for other RMBS trusts that involved the same originators, sponsors, sellers and servicers as the
Trusts at issue here. Based on its involvement in these putback actions, which alleged pervasive
and systemic breaches of representations and warranties, U.S. Bank was aware of similarly
pervasive and systemic breaches of representations and warranties in the Trusts.
439. In each of the putback actions, loan-level reviews were conducted which
identified breach rates exceeding 50% in every offering, including those sponsored by the same
sponsors as the Trusts and involving loans originated and sold by the same originators and
sponsors as the Trusts.
440. For example, in U.S. Bank National Association, as Trustee for HarborView
Mortgage Loan Trust, Series 2005-10 v. Countrywide Home Loans, Inc. et al., Index No.
652388/2011 (N.Y. Sup. Ct. Aug. 29, 2011), Countrywide originated all 4,000 loans included in
HVMLT 2005-10. Notably, in its complaint filed at the instruction of certificateholders, U.S.
Bank stated that [s]oon after being sold to the Trust, Countrywides Loans began to become
delinquent and default at a startling rate. As a result, U.S. Bank conducted a forensic review of
a 786-loan sample, which revealed that 520 of the loans, or what U.S. Bank characterized as an
extraordinary sixty-six percent of the sample breached one or more of the representations and
warranties. U.S. Bank claimed that this was consistent with Countrywides abject failure to
abide by the very representations and warranties it consistently made to induce the purchase of
its Loans for securitizations, including the purchase of the Loans by the Trust. Because of the

warranties claims against the many other responsible parties, including sellers to the Lehman-
label Trusts at issue and the solvent servicing entities.
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pervasiveness and severity of these breaches, U.S. Bank demanded in its complaint that
Countrywide repurchase all 4,000 loans in the offering.
441. Likewise, U.S. Bank has instituted several putback actions against GreenPoint at
the instruction of Certificateholders. For instance, in U.S. Bank N.A. ex rel. Lehman XS Trust,
Series 2006-GP2 et al. v. GreenPoint Mortgage Funding Inc. et al., Nos. 12-cv-7935, 12-cv-
7942 and 12-cv-7943 (S.D.N.Y. Jan. 25, 2013), U.S. Bank sued GreenPoint for its failure to
comply with its repurchase obligations under PSAs governing the transfer of 9,594 mortgage
loans exceeding $3.39 billion. U.S. Bank alleges that it has uncovered evidence of pervasive
breaches of GreenPoints representations and warranties. Specifically, U.S. Banks forensic
analysis and re-underwriting of a significant number of the Loans has revealed that GreenPoint
has breached one or more of its R&Ws with respect to approximately 98 percent of those loans.
U.S. Bank alleged that it anticipated similar breaches and that because GreenPoint made pool-
wide breaches of R&Ws which effectively defeated the object and purpose of the MLPAs,
U.S. Bank is entitled to rescissionary damages.
442. U.S. Bank came to the same conclusions regarding the credit quality of
GreenPoint originated loans in U.S. Bank National Association, solely in its capacity as Trustee
of the Morgan Stanley Mortgage Loan Trust 2007-2AX (MSM 2007-2Ax) v. Morgan Stanley
Mortgage Capital Holdings LLC et al., Index No. 650339/2013 (N.Y. Sup Ct. July 8, 2013).
There, a forensic analysis of 56 home loans in a putback action against Morgan Stanley and
GreenPoint revealed that all 56 (i.e. 100%) loans breached the representations and warranties,
with each loan breaching on the average more than three. A loan-level review of an additional
758 loans in the trust confirmed that the principal originators failed to adhere to industry-
standard and reasonable underwriting guidelines in an extremely high percentage of cases
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and as a result, given these high breach rates, it is reasonable to infer that breaches of
Defendants R&Ws exist throughout the entire pool of Mortgage Loans in the Trust. U.S.
Bank v. Morgan Stanley et al., Index No. 650339/2013 (N.Y. Sup Ct. July 8, 2013), Compl. 5.
443. U.S. Bank, at the insistence of certificateholders, has also brought several putback
actions against DLJ Mortgage. For example, in U.S. Bank National Association, solely in its
capacity as Trustee of the CSMC Asset-Backed Trust 2007-NC1 (CSMC 2007-NC1) v. DLJ
Mortgage Capital, Inc., Index No. 652699/2013 (N.Y. Sup. Ct. Jan. 6, 2014), U.S. Banks
forensic review revealed that of 1,684 of the 1,686 loan files reviewed from a DLJ Mortgage
sponsored offering a staggering 99% breached one or more of the representations and
warranties regarding the mortgage loans. U.S. Bank noted that [b]ased on the information
derived from these reviews, it reasonably can be inferred that breaches of DLJs representations
and warranties exist throughout the entire pool of Mortgage Loans in the Trust. U.S. Bank made
similar allegations against DLJ Mortgage in Home Equity Mortgage Trust 2006-1 et al. v. DLJ
Mortgage Capital, Inc. et al., Index No. 156016/2012 (N.Y. Sup. Ct. Jan. 29, 2012), where the
Re-underwriting Review showed that 796 of 806 [i.e., 99%] of the examined Mortgage Loans
had defects constituting a breach of one or more of DLJs representations and warranties under
the PSAs) and in Home Equity Mortgage Trust Series 2006-5 v. DLJ Mortgage Capital, Inc. et
al., Index No. 653787/2012 (N.Y. Sup. Ct. April 8, 2013), where U.S. Banks independent loan
review uncovered material breaches in 93.8 percent of the reviewed mortgage loans).
444. U.S. Bank has drawn telling conclusions regarding UBSs faulty securitization
practices. For example, in MASTR Adjustable Rate Mortgages Trust 2006-OA2 et al. v. UBS
Real Estate Securities Inc., No. 12-cv-7322 (S.D.N.Y. Sept. 28, 2012), U.S. Bank has sued UBS
for breach of its repurchase obligations in connection with three securitizations that it sponsored
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containing a total of 4,642 defective mortgage loans. U.S. Bank has demanded that UBS
repurchase at least 3,616 of the mortgage loans, and has alleged that the securitizations at issue
were assembled from toxic mortgage loans and presented a materially greater risk of
delinquency and default. Compl. 41.
445. In short, the incredibly high rates of defaults cited by U.S. Bank in support of
certain putback actions demonstrates U.S. Bank was well aware of the pervasive and systemic
breaches of representations and warranties of the loans at issue here as well.
H. U.S. Bank Attempted To Contract
Around Its Liability And Obligations In
Acquiring Bank of Americas Trustee Business
446. On November 15, 2010, U.S. Bank announced that it would acquire Bank of
Americas U.S. and European corporate trust business, including its RMBS trust business. The
$35 million cash transaction closed on or about January 5, 2011, and significantly increased U.S.
Banks market share in the residential RMBS market. In addition to providing U.S. Bank with
an additional $8 billion in deposits, U.S. Banks Corporate Trust Services unit absorbed
approximately 2,150 active securitization and related transactions, more than 2.4 million
residential mortgage cases, and $1.1 trillion in assets under administration. The acquisition made
U.S. Bank the largest RMBS trustee by dollar amount and number of trusts under administration.
447. Through its acquisition of Bank of Americas trustee business, U.S. Bank also
inherited the legacy securitization trust business of LaSalle Bank, N.A. (LaSalle), which Bank
of America had previously acquired in October 2007. Through the transaction, U.S. Bank
succeeded to Bank of America and LaSalle as Trustee for certain Trusts.
448. Upon information and belief, prior to acquiring Bank of Americas corporate trust
business, U.S. Bank learned that Bank of America faced significant liability for its own and
LaSalles failure to take action to protect the RMBS trusts for which they served as trustees. In
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particular, U.S. Bank learned through its due diligence on the transaction (and otherwise) that
Bank of America and LaSalle had failed and unreasonably refused to enforce the rights of the
trusts with respective defective mortgage loans and deficient loan servicing. U.S. Bank knew
that the loans underlying the trusts were in material breach of representations and warranties and
were not being properly serviced, and would thus cause the trusts to incur (and continue to incur)
substantial losses. Nevertheless, U.S. Bank proceeded with the acquisition to solidify its position
at the top of the securitization trustee business with the greatest market share. U.S. Bank
attempted to avoid the substantial liability of its predecessor trustees and avoid its prospective
obligations to the subject trusts and certificateholders by negotiating with Bank of America for
certain indemnifications and other provisions purporting to provide protection regarding its
successor liability. U.S. Banks attempt to insulate itself from successor liability in connection
with the acquisition of the corporate trust business of Bank of America further confirms its
knowledge that the Trusts were plagued with defective loans and servicer violations.
Furthermore, U.S. Banks failure to take action against Bank of America to enforce the Trusts
rights against Bank of Americas and LaSalles contractual breaches and statutory violations was
unreasonable and an additional breach of U.S. Banks duties and obligations as Trustee for the
Trusts.
X. THE TRUSTS ALSO SUFFERED FROM
PERVASIVE SERVICER VIOLATIONS
449. In the aftermath of the financial crisis, the mortgage loan servicing industry has
received increased scholarly, popular, regulatory and political attention as a result of rampant
servicing abuses in connection with the administration of and foreclosing on mortgage loans
backing private-label RMBS.
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450. Much like other private-label RMBS trusts of the same vintage, each of the Trusts
suffer from ongoing Events of Default caused by the servicers failure to observe and perform, in
material respects, the covenants and agreements imposed on them by the PSAs. The servicers
breach of their covenants is confirmed through several federal and state government
investigations and published reports, well publicized news reports, and public and private
enforcement actions that have described RMBS servicers systemic and pervasive deviation from
usual, customary and lawful servicing practices in their administration mortgage and, more
specifically, illegal and illicit servicing activities by the same servicers who service the loans
held by the Trusts.
A. The Servicers Failed To Give Notice Of Seller
Breaches Of Representations and Warranties
And Enforce The Sellers Repurchase Obligations
451. As with the Trustee, the PSAs require the servicers to give prompt written notice
to all parties to the PSAs of a breach of a representation or warranty made by a seller in respect
of the mortgage loans that materially and adversely affects the value of any mortgage loan or the
interests of the Certificateholders in any such mortgage loan, upon the servicers discovery of
such breach. Moreover, the servicers are similarly required to enforce the sellers obligation to
repurchase, substitute, or cure such defective loans as required under the PSAs.
452. In many cases, the servicers are affiliates of the sellers because in connection with
the sale of a loan pool, the seller secured the retention of servicing rights to these loans for its
servicing division. These servicers had actual knowledge of their affiliate mortgage loan sellers
abusive underwriting and securitization practices, and therefore had actual knowledge at the time
of the Trusts purchase of these loans that that these sellers included high percentages of
defective loans within the loan pools. These servicers failed to notify parties to the PSAs of the
discovery of mortgages that were in violation of applicable representations and warranties at the
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time they were purchased by the Trusts, and failed to enforce the sellers repurchase obligations,
despite their awareness of loans that were in violation of representations and warranties.
453. Additionally, for the benefit of the Trusts, and pursuant to the PSAs, the sponsors
acquired primary mortgage guaranty insurance (PMI) policies for loans that had a LTV ratio in
excess 80%, which served as credit enhancements in order to offer additional security to
Certificateholders in the Trusts and to induce rating services to provide a higher credit rating for
the Certificates, thereby making the Certificates more attractive to potential purchasers. In the
aftermath of the financial crisis, servicers have tendered claims to mortgage insurers under the
PMI policies on the Trusts behalf on defaulted loans. The mortgage insurers have denied
coverage, canceled or rescinded the mortgage insurance policies, or invoked policy exclusions
for a high percentage of claims as a result of misrepresentations regarding the insured mortgage
loans, including on the basis that the originator engaged in predatory lending or systemic fraud in
the underwriting of the mortgage loans. After these mortgage insurance claim denials, the
servicers failed to observe or perform in a material respect the covenants and/or agreements on
their part contained in the PSAs by failing to notify parties to the PSAs that the mortgage loan
sellers violated the required representations and warranties at the time they sold loans to the
Trusts, although such violations were discovered through the claim tendering process. Moreover,
the Servicers failing to tender the defective, defaulted loans to the Sellers for repurchase.
Instead, the servicers charged the over-collateralized accounts for losses, causing damage to the
Trusts and their Certificateholders.
454. Further, as noted above, the servicers have regularly modified mortgage loans
held by the Trusts. Plaintiffs are informed and believe that in the process of modifying these
mortgage loans, the servicers have discovered that specific loans breached applicable seller
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representations and warranties because the loan modification process involves scrutinizing the
underlying origination and mortgage loan files, and any supplemental information provided by
the borrower to assess the borrowers ability to pay. Thus, in the process of performing loan
modifications, the servicers had to have discovered breaches of representations and warranties
regarding the characteristics of the loan, the creditworthiness of the borrower, the adequacy of
the collateral and the title status of the mortgages. Nevertheless, the servicers systemically failed
to notify the other parties of these breaches.
455. For example, since the closing of the securitizations, Wells Fargo has modified
761 mortgage loans that represented some $162.7 million in scheduled balances in the SABR
2006-NC1 Trust (or over 20% of the original face value), and Aurora has modified 1,745
mortgage loans that represented some $216.6 million in scheduled balances in the SAIL 2005-
HE3 Trust (or approximately 10% of the original face value). It is unlikely that these servicers
could have modified these mortgage loans without becoming aware of breaches of
representations and warranties.
456. As also set forth above, there has been widespread public evidence of the
originators abandonment of underwriting guidelines and the sponsors faulty securitization
practices that made the servicers aware of material seller breaches representations and warranties
within the Trusts loan pools. Nevertheless, the servicers have not notified the other parties to the
PSAs of these seller breaches or enforced the sellers repurchase obligations.
457. Further, the servicers have been specifically notified by monoline insurers of
pervasive breaches by the sellers. For instance, Countrywide is one of the leading servicers of
the Trusts, administrating approximately $19 billion in mortgage loans securitized in the Trusts.
Countrywide has been notified in litigation by MBIA, Ambac, FGIC, Assured Guaranty, and
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other mortgage and monoline insurers of pervasive and systemic breaches of representations and
warranties by Countrywide entities in their capacity as originators. Likewise, in MBIA v. Credit
Suisse, Index No. 603751/2009, MBIA named, among other parties, Select Portfolio Servicing,
Inc., which services over $10 billion in mortgage loans held by the Trust. In addition to alleging
that Select Portfolio Servicing, Inc. had engaged in a number of improper servicing activities,
MBIA reported that 79% of randomly selected loans and 87% of adversely selected loans
breached representations and warranties in a Credit Suisse securitization. Similarly, in MBIA Ins.
Corp. v. Morgan Stanley, et al., Index No. 29951/2010 (N.Y. Sup. Ct. Feb. 2, 2011), MBIA sued,
among other parties, Saxon Mortgage Service Inc., which services over $6 billion in mortgage
loans held by the Trust. MBIA reported that 93% of randomly selected loans and 98% of
adversely selected loans breached representations and warranties in a Morgan Stanley
securitization.
458. Notwithstanding the servicers discovery of material breaches of representations
and warranties, the servicers have not notified the other parties to the PSAs (including U.S.
Bank) of these breaches. Moreover, although aware of specific mortgage loans that breach
applicable representations and warranties, the servicers have failed to enforce the sellers
obligation to repurchase, substitute, or cure such defective loans as required under the PSAs.
459. The servicers systemic and pervasive failure to give notice of the sellers material
breaches of representations and warranties and to enforce the sellers repurchase obligations have
materially affected the rights of the Trusts and all Certificateholders under the PSAs in that they
have deprived the Trusts of mortgage loans of adequate credit quality as initially represented, or
alternatively funds representing the Repurchase Price as defined by the PSAs, with respect to
each defective mortgage loan.
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B. The Servicers Have Violated
Their Prudent Servicing Obligations
460. The PSAs require that the servicer service and administer the mortgage loans for
and on behalf of the Certificateholders, and, consistent with the terms of the PSAs, (i) in the
same manner in which it services and administers similar mortgage loans for its own portfolio or
for other third parties, giving due consideration to customary and usual standards of practice of
prudent institutional mortgage lenders servicing similar loans, (ii) with a view to maximizing the
recoveries with respect to such mortgage loans on a net present value basis, and (iii) without
regard to, among other things, the right of the servicer to receive compensation or other fees for
its services under the PSA, the obligation of the servicer to make servicing advances under the
PSA, and the servicers ownership, servicing or management for others of any other mortgage
loans.
461. Highly publicized government enforcement actions and settlements reached with
the servicers demonstrate that the servicers have systemically and pervasively violated these
prudent servicing obligations. For example, on June 7, 2010, the Federal Trade Commission
(FTC) filed a civil enforcement action against Countrywide and BAC Home Loans Servicing,
LP (f/d/b/a Countrywide Home Loans Servicing, LP), a wholly-owned subsidiary of Bank of
America, National Association, (collectively, Countrywide/BAC) for their unlawful acts and
practices in servicing mortgage loans. See Fed. Trade Commission v. Countrywide Home
Loans, Inc. et al., No. 10-cv-4193 (C.D. Cal. June 7, 2010). In March 2008, prior to being
acquired by Bank of America Corporation, Countrywide was ranked as the top mortgage servicer
in the United States and had a servicing portfolio with a balance of over $1.4 trillion. In
September 2009, after its acquisition of Countrywide, Bank of America was ranked as the
nation's top mortgage servicer with a servicing portfolio of over $2.1 trillion. Countrywide/BAC
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are servicers for many of the Trusts. The FTC emphasized that many of the loans improperly
serviced by Countrywide/BAC are the same risky, high-cost loans that had been originated or
funded by Defendants parent company, Countrywide Financial Corporation [], and its
subsidiaries [].
462. According to the FTC, when borrowers fell behind on their payments,
Countrywide/BAC imposed a number of default-related services (such as property inspections
and foreclosure trustee services) by funneling the work through panoply of Countrywide
subsidiaries. In its mortgage servicing operation, Countrywide/BAC follows a so-called
vertical integration strategy to generate default-related fee income. Rather than obtain default-
related services directly from third-party vendors and charge borrowers for the actual cost of
these services, Countrywide/BAC formed subsidiaries to act as middle-men in the default
services process. These subsidiaries exist solely to generate revenues for Countrywide/BAC and
do not operate at arms-length with Countrywide/BAC. Countrywide/BAC and their subsidiaries
[a]s a matter of practice added a substantial mark-up to their actual costs for the services
and then charged the borrowers the marked-up fees. The inflated fees were both contrary to
prudent servicing standards and violated the mortgage contracts, which limit fees chargeable to
the borrower to actual costs of the services and as are reasonable and appropriate to protect the
note holder's interest in the property and rights under the security instrument.
463. Countrywide/BAC similarly breached servicing standards and mortgage contracts
when servicing loans for borrowers who sought to save their homes through a Chapter 13
bankruptcy. According to the FTC, Countrywide/BAC made various representations to those
borrowers about their mortgage loans that were false or lacked a reasonable basis, and failed to
disclose to borrowers during their bankruptcy case when fees and escrow shortages and
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deficiencies accrued on their loan. After the bankruptcy cases have closed and borrowers no
longer have the protection of the bankruptcy court, Countrywide/BAC collected those amounts,
including through foreclosure actions.
464. By way of further example, in February 2012, 49 state attorneys general and the
federal government announced a historic joint $25 billion state-federal settlement with the
countrys five largest mortgage servicers and their affiliates for misconduct related to their
origination and servicing of single family residential mortgages: (i) Residential Capital, LLC,
Ally Financial, Inc., and GMAC Mortgage, LLC; (ii) Bank of America Corporation, Bank of
America, N.A., BAC Home Loans Servicing, LP, Countrywide Financial Corporation,
Countrywide Home Loans, Inc., Countrywide Mortgage Ventures, LLC, and Countrywide Bank
FSB; (iii) Citigroup Inc., Citibank, N.A., and CitiMortgage, Inc.; (iv) J.P. Morgan Chase &
Company and J.P. Morgan Chase Bank, N.A.; and (v) Wells Fargo & Company and Wells Fargo
Bank, N.A. of the state and federal investigations of these mortgage servicers.
465. In their corresponding complaint filed on March 14, 2012, the state attorneys
general and the federal government alleged that these servicers had engaged in unfair, deceptive
and unlawful servicing processes, including (i) failing to timely and accurately apply payments
made by borrowers and failing to maintain accurate account statements; (ii) charging excessive
or improper fees for default-related services; (iii) failing to properly oversee third party vendors
involved in servicing activities on behalf of the Banks; (iv) imposing force-placed insurance
without properly notifying the borrowers and when borrowers already had adequate coverage;
(v) providing borrowers false or misleading information in response to borrower complaints; and
(vi) failing to maintain appropriate staffing, training, and quality control systems.
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466. Similarly, on December 19, 2013, the Consumer Financial Protection Bureau
(CFPB), authorities in 49 states, and the District of Columbia filed a proposed court order
requiring the countrys largest nonbank mortgage loan servicer, Ocwen and its subsidiary, Ocwen
Loan Servicing, to provide $2 billion in first lien principal reduction to underwater borrowers in
order to compensate for years of systemic misconduct at every stage of the mortgage servicing
process. The consent order also covered two companies previously purchased by Ocwen, Litton
Loan Servicing LP (Litton) and Homeward Residential Holdings LLC (previously known as
American Home Mortgage Servicing, Inc. or AHMSI). According to the CFPB and Attorneys
Generals complaint, Ocwen violated state consumer law in a number of ways, including (i)
failing to timely and accurately apply payments made by borrowers and failing to maintain
accurate account statements; charging borrowers unauthorized fees for default-related services;
imposing force-placed insurance on consumers when Ocwen knew or should have known that
they already had adequate home-insurance coverage; and providing false or misleading
information in response to consumer complaints.
467. High profile class actions against the servicers have further revealed violations of
prudent servicing violations. For example, in June 2012, nationwide class actions were brought
on behalf of million homeowners against JPMorgan, Wells Fargo, Bank of America, Citibank
N.A., and HSBC Bank Inc. who claimed that they were overcharged for forced-placed insurance.
The borrowers specifically alleged that these servicers imposed policies for forced-place
insurance that were far more expensive than market rates and received hundreds of millions of
dollars in clandestine commissions from the insurance companies writing the policies. The
servicers practice of imposing expensive forced place insurance increased the borrowers
monthly payment by a large amount. As a result, homeowners who were already behind in
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payments or were facing financial difficulties went into foreclosure. The plaintiff borrowers
have also entered into several well publicized settlements with these servicers, including
settlements of $300 million settlement with JPMorgan, $110 million with Citibank, $32 million
with HSBC and $19.3 million with Wells Fargo.
25

468. Notably, the Ally/GMAC, Bank of America, Citi, JPMorgan, Wells Fargo, Ocwen
and HSBC entities subject to the above-mentioned settlements collectively service and
administrate over $700 billion in mortgage loans held by the Trusts. Plaintiffs are informed and
believe that these servicers and each of the other servicers to the Trusts have engaged in the same
violations of their prudent servicing obligations in servicing and administrating the mortgage
loans for the Trusts.
469. The servicers systemic and pervasive failure to observe their prudent servicing
obligations have materially affected the rights of the Trusts and all Certificateholders under the
PSAs in that the violations have exacerbated the Trusts losses and have fostered uncertainty as
to the timely recovery of collateral.
C. The Servicers Have Violated Their Foreclosure Obligations
470. The PSAs require the servicers to use their best efforts, consistent with accepted
servicing practices, to foreclose upon or otherwise comparably convert the ownership of
properties securing such of the mortgage loans as they come into and continue in default and as
to which no satisfactory arrangements can be made for collection of delinquent payments.
Moreover, each of the PSAs contemplate that foreclosures and liquidations of defaulted

25
Alfred Herrick et al. v. JPMorgan Chase Bank N.A. et al., 13-21107 (S.D. Fla.); Hall v. Bank
of America, N.A., 12-22700 (S.D. Fla.), Lopez v. HSBC Bank USA, N.A. et al., 13-21104 (S.D.
Fla.), and Fladell et al. v. Wells Fargo Bank N.A., et al., 13-60721 (S.D. Fla.); Casey, et al., v.
Citibank, N.A., et al., 12-00820 (N.D.N.Y.)
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mortgages will proceed forthwith and in accordance with applicable law, provided the
documentation is in order, as a matter of fairness to all parties.
471. Highly publicized government enforcement actions and settlements reached with
the servicers similarly have revealed the servicers have breached their foreclosure obligations.
For example, in the fourth quarter of 2010, the Federal Reserve System, the OCC, the FDIC, and
the OTS (collectively, the Agencies) conducted on-site reviews of foreclosure processing at
fourteen federally regulated mortgage servicers which represented more than two-thirds of the
servicing market. These servicers included Ally Bank/GMAC, Aurora, Bank of America,
Citibank, EverBank, HSBC, JPMorgan, MetLife, OneWest, PNC, Sovereign Bank, SunTrust,
U.S. Bank, and Wells Fargo, many of which are servicers to the Trusts. In April 2011, the
Agencies issued a joint report entitled Interagency Review of Foreclosure Policies and
Practices, summarizing the findings of their reviews and providing an overview of the potential
impacts associated with instances of foreclosure-processing weaknesses that occurred
industrywide. Notably, the Agencies reviews found critical weaknesses in [each of the]
servicers foreclosure governance processes, foreclosure document preparation processes, and
oversight and monitoring of third-party vendors, including foreclosure attorneys. Based on the
deficiencies identified in these reviews and the risks of additional issues as a result of weak
controls and processes, the Agencies initiated formal enforcement actions against each of the
fourteen servicers subject to the review to address those weaknesses and risks. The enforcement
actions detailed the weaknesses at each servicer and required each servicer, among other things,
to conduct a more complete review of certain aspects of foreclosure actions that occurred
between January 1, 2009, and December 31, 2010.
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472. Similarly, as noted above, on March 14, 2012, following an extensive
investigation of Wells Fargo, Bank of America, Citigroup, Countrywide, JPMorgan, Ally
Financial, Inc., and GMAC Mortgage, LLC some of the same servicers for the Trusts the
DOJ, the Department of Housing and Urban Development and 49 state attorney generals filed a
complaint against these servicers and announced the $25 billion National Mortgage Settlement of
the claims set forth in the complaint. In the complaint, the Attorneys General and federal
government alleged that these servicers had engaged in wrongful conduct related to foreclosures,
including failing to properly identify the foreclosing party, charging improper fees related to
foreclosures, preparing, executing, notarizing or presenting false and misleading documents and
engaging in robosigning.
473. Likewise, as noted above, on December 19, 2013, following an extensive
investigation of Ocwen and certain of its acquired entities, the CFPB, authorities in 49 states, and
the District of Columbia filed a complaint against Ocwen and announced a $2 billion settlement
of the claims stated in the complaint. The CFPBs and Attorneys Generals complaint alleged
that Ocwen engaged in same wrongful conduct related to foreclosures described in the complaint
against the servicers leading to the National Mortgage Settlement.
474. In addition, private litigation has shined the light on servicers wrongful
foreclosure practices. For example, in a California class action case that has survived a motion to
dismiss, plaintiffs alleged that Aurora (the sixth largest Servicer of loans in the Trusts) foreclosed
on homes without any notice that loan modifications were denied and without allowing
borrowers access to any cure method despite promises in an agreement to do so. Mauder et al.
v. Aurora Loan Services, LLC, No. 10-cv-03383 Class Action Compl. 2 (N.D. Cal. Aug. 2,
2010).
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475. Servicers have also frequently wrongfully foreclosed on properties owned by
military servicemembers who were protected under the Servicemembers Civil Relief Act
(SCRA). Based on a federal government complaint accusing Countrywide Home Loans
Servicing LP (the third largest Servicer of loans in the Trust) of violating the SCRA on
approximately 160 properties, Countrywide consented to pay $20 million to the victims. United
States v. BAC Home Loans Servicing, LP F/K/A Countrywide Home Loans Servicing, LP And
Any Successors In Interest, No. 11-cv-04534, Consent Order 18. (C.D. Cal. May 26, 2011).
476. The servicers have also routinely kept defaulted mortgages on their books, rather
than foreclose or liquidate them. Indeed, in several states, the average days for delinquent loans
in foreclosure in the Trusts have doubled or quadrupled.
Sources: RealtyTrac, Moodys Analytics
477. The servicers delay in foreclosing has allowed the servicers to charge unearned
and unwarranted servicing fees, as well as unauthorized fees for default-related services, on
mortgages that would have been liquidated but for the servicers breach of their duties. For
example, in the complaint that led to the National Mortgage Settlement discussed above, the
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federal government and 49 states accused Citigroup, Wells Fargo, Bank of America, JPMorgan,
Countrywide, and Ally Financial, Inc. (many of which were servicers of loans in the Trusts) of
unfair and deceptive practices in the discharge of its loan servicing activities for, among other
things, charging excessive or improper fees for default-related services. See United States et
al. v. Bank of America Corp. et al., No. 12-cv-0361, Compl. 51 (D.D.C. Mar. 12, 2012).
478. The servicers systemic and pervasive violation of their foreclosure obligations
have materially affected the rights of the Trusts and all Certificateholders under the PSAs in that
the Trusts have incurred costs of remedying procedural errors and re-filing affidavits and other
foreclosure documents. The Trusts have also been forced to bear costs related to disputes over
note ownership or authority to foreclose, and to allegations of procedural violations through the
use of inaccurate affidavits and improper notarizations. The Trusts have further incurred losses
as a result of delays or other damages caused by the weaknesses in the servicers foreclosure
processes.
D. The Servicers Have Violated Their Modification Obligations
479. The PSAs provide that the servicers agree to a modification of any mortgage loan
only in certain specified circumstances. When modifications are required to remedy predatory
lending violations, the PSAs require that the seller and not the Trusts or the Certificateholders
bear the costs to cure such breach.
480. The servicers have breached the PSAs by agreeing to modify loans held in the
Trusts for the purpose of settling predatory lending claims made by various Attorneys General
against their parent companies while breaching their obligation to demand that the offending
mortgage seller (their parent companies) bear the costs of curing the violation, as well as the
expenses reasonably incurred in enforcement of the sellers obligation to cure predatory
mortgages. For instance, on October 6, 2008, Attorney Generals in eleven states announced a
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landmark, $8.68 billion settlement with Countrywide Home Loans, Countrywide Financial
Corporation and Full Spectrum Lending of predatory lending claims. The settlement enabled
eligible subprime and pay-option mortgage borrowers whose loans serviced by Countrywide to
obtain loan modifications valued at up to $3.4 billion worth of reduced interest payments and, for
certain borrowers, reduction of their principal balances.
481. The servicers have also breached the PSAs by agreeing to modify loans held in
the Trusts for the purpose of settling claims related to their wrongful servicing and foreclosure
practices made by various Attorneys General. For example, with respect to the National
Mortgage Settlement, in meeting their payment obligations, the settling servicers receive credit
for writing down principal of, and providing forbearance for, mortgage loans held by the Trusts.
482. The servicers violation of their modification obligations have materially affected
the rights of the Trusts and all Certificateholders under the PSAs in that the servicers and their
parent companies have been unjustly enriched to the detriment of the Trusts and
Certificateholders by using Trust collateral to settle claims that are not, and could never be, made
against the Trusts.
E. The Servicers Have Abused Their Servicing Advances Obligations
483. The PSAs provide that the servicers are to advance principal and interest on a loan
only if they determine that the advance payment is recoverable. The PSAs further provide that
the servicers may only recover servicing advances that are customary, reasonable and necessary
out-of-pocket costs and expenses incurred in the performance by the servicers of their servicing
obligations. The servicers have abused their advancing obligations to enrich themselves to the
direct detriment of the Trusts. In particular, the servicers have manipulated the recoverable
designation to their advantage. During low interest rate environments, the servicers have
designated severely delinquent loans as recoverable so that the loans would be kept in the Trusts
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loan pools and the servicers could continue to earn their servicing fees on these loans, which
exceed the relatively low cost of financing the advances on these delinquent loans. However,
when interest rates have increased, the servicers have strategically switched the mortgage loans
designation from recoverable to unrecoverable. The switch in designation enables the servicers to
recoup all prior advances as a senior claim of the Trusts.
484. The servicers manipulation of the recoverable designation was illustrated in the
May 2013 remittance reports for many of the Trusts. Following the Federal Reserves May 11,
2013 announcement of its plan for tapering its bond-buying program, interest rates quickly shot
up. In a transparent response to the increase in the financing of their advances, the servicers
switched the designation from recoverable to unrecoverable for an unprecedented amount of
delinquent mortgage loans within the Trusts. Specifically, the servicers wrote down an amazing
$6.6 billion in May 2013 alone, representing a 96% increase over the prior reporting period. The
servicers massive writedowns are particularly suspicious, given that the mortgaged property
values had been steadily rising for the past twelve months.
485. The Trusts and its Certificateholders are harmed by the servicers manipulation of
the recoverable designation because the Trusts incur more interest rate risk exposure than
expected since the servicers recoverability designations are strategically determined as a
function of interest rates, as opposed to the value of the mortgaged property as required under the
PSAs.
486. The servicers abuse of their servicing advancing obligations is further illustrated
by their increasing use of unrecognized forbearances. The servicers modify delinquent
mortgage loans by granting forbearances to the borrowers for extended periods of time which act
to reduce the principal amount of the mortgage loan. The forbearances allow the servicers to
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lower their advanced principal payments on the loans. Nevertheless, the servicers do not
formally write-down the loan balance or make any recognition on the Trusts accounts. Thus, the
mortgage loans remain in the Trusts at full value, thereby allowing the servicers to earn full
servicing fees, which are calculated as a percentage of the total principal amount of the mortgage
loans in the Trusts loan pools, although the mortgage loans are accruing interest at a lower
principal amount and without the servicers having to make any advances.
487. According to information contained in an industry study conducted by Credit
Suisse, as of April 2013, Credit Suisse estimates that unrecognized forbearances in the Trusts
total over $1.4 billion.
26
At least 721 Trusts have some amount of unrecognized forbearance,
with many exceeding 5% of the Trusts current collateral balance:
Top 10 U.S. Bank Trusts By Share Of Current Balance Forborne
Data as of April 2013 distributions. 1st lien only
Offering Original Face
Amount
Current
Balance (June
2013)
Estimated
Unrecognized
Forbearance
Unrecognized
Forbearance as %
of Current Balance
CBASS 2006-CB1 $808,679,656 $115,960,658 $14,092,239 12.15%
ARMT 2007-1 $1,417,518,363 $456,953,465 $42,410,823 9.28%
CSMC 2007-7 $290,050,826 $127,790,199 $10,235,628 8.01%
CSMC 2007-1 $1,223,703,100 $466,183,943 $37,123,538 7.96%
CBASS 2005-CB7 $423,019,000 $62,121,407 $3,793,600 6.11%
TBW 2006-6 $571,696,142 $198,208,715 $10,415,185 5.25%
SASC 2006-ZA $207,142,000 $70,546,832 $3,600,571 5.10%
CSAB 2007-1 $689,079,047 $312,970,233 $14,816,635 4.73%
TBW 2006-4 $419,077,050 $129,859,360 $5,696,001 4.39%
CSMC 2007-3 $1,339,180,470 $519,011,864 $22,594,823 4.35%
Source: Credit Suisse, Loan Performance

26
Credit Suisse estimates that as of April 2013 unrecognized forbearances on non-agency RMBS
deals issued after 2000 (first lien only) totaled around $8.3 billion.
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488. The servicers pervasive use of unrecognized forbearances harm the Trusts and
their Certificateholders since they pay higher servicing fees to the servicers and are not informed
in a timely manner about impairments to mortgage loans in the underlying loan pools.
489. Despite the requirement that servicing advances were to be incurred only for
reasonable and necessary out-of-pocket costs, the servicers instead utilized affiliated vendors
who marked up their services to a level 100% or more above the market price to provide
services related to the preservation, restoration, and protection of mortgaged property, in a
fraudulent, unauthorized, and deceptive effort to supplement its servicing income.
XI. U.S. BANK HAS KNOWN OF SERVICER
VIOLATIONS PLAGUING THE TRUSTS
490. There is ample evidence that, beginning in early 2009 and continuing to the
present, U.S. Bank and its responsible officers have known of the above described widespread
and severe failures on the part of the servicers to observe or perform in material respects their
obligations under the PSAs. Preliminarily, as discussed above, since 2009 and continuing to the
present there has been a steady stream of public disclosures regarding the servicers violations.
Nevertheless, apart from the highly publicized government investigations, reports and
enforcement actions, as well as high profile litigation involving the servicers, as explained below
there is a host of additional evidence demonstrating U.S. Banks and its responsible officers
knowledge that the servicers have materially breached their contractual obligations.
A. U.S. Bank Itself Was Involved In
Government Enforcement Actions And
Litigation Stemming From The Servicers Violations
491. Additionally, U.S. Bank and its responsible officers knew of the servicers
improper servicing practices because, as described in greater detail below (Section XV), U.S.
Bank and its affiliates, in their capacity as servicers to other RMBS trusts, were targets together
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with many of the servicers for the Trusts in highly publicized governmental investigations,
prosecutions and settlements. For example, along with thirteen other of the nations largest
servicers, the Agencies similarly found deficiencies in U.S. Banks servicing and foreclosure
processes, brought a formal enforcement action against U.S. Bank, participated in a joint
settlement including Aurora, Bank of America, Citibank, Goldman, HSBC, JPMorgan, MetLife
Bank, Morgan Stanley, PNC, Sovereign, SunTrust, U.S. Bank, and Wells Fargo. U.S. Banks
involvement in such proceedings would have made it acutely aware of the deficiencies of each of
the other servicers subject to these actions.
492. U.S. Bank and its responsible officers also knew of the servicers improper
servicing practices through its involvement in litigation highlighting servicing failures, such as in
judicial foreclosure proceedings exposing the servicers failure to correct irregularities in the
chain of title. For example, in Naranjo v. SBMC Mortgage, No. 11-cv-2229-L(WVG), 2012 WL
3030370 (S.D. Cal. July 24, 2012), the court declined U.S. Banks motion to dismiss plaintiffs
claims that the purported assignment of her mortgage loan serviced by WaMu (a Servicer to the
Trust) was not completed by the date required by the PSA and, therefore, a subsequent
assignment, substitution, and notice of default and election to sell was improper. Similarly,
Massachusetts courts have repeatedly prohibited U.S. Bank from foreclosing on mortgaged
properties due to irregularities in the chain of title have prevented U.S. Bank from foreclosing on
mortgages in Bear Stearns RMBS trusts, which are similar to the Trusts. U.S. Bank Nat'l Ass'n v.
Githira, 08 MISC 386385 (CWT), 2009 WL 3530024 (Mass. Land Ct. Oct. 30, 2009) (refusing
to quiet title to mortgaged property in U.S. Banks favor because the entire foreclosure was
fatally defective in that U.S. Bank was not even the holder of the mortgage on the day the
foreclosure took place, either of record or in fact); U.S. Bank Nat. Assn v. Ibanez, 458 Mass.
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637, 941 N.E.2d 40 (2011) (affirming trial courts ruling that U.S. Bank did not demonstrate that
it was the holder of the mortgage at the time that it foreclosed on a mortgaged properties, and
therefore failed to demonstrate that U.S. Bank, on behalf of the trust, acquired fee simple title to
the property by purchasing it at the foreclosure).
B. U.S. Bank And Its Responsible
Officers Received Written Notice From
Certificateholders Of Pervasive And Systemic Servicer Breaches
493. In its capacity as trustee to other RMBS trusts that are not the subject of this
action, U.S. Bank and its responsible officers repeatedly received written notice from
Certificateholders of the same systemic servicing violations described above perpetrated by the
very same servicers for the Trusts. Based on the systemic and pervasive practices complained of
in the Certificateholders breach notices, U.S. Bank and its responsible officers knew that
servicers were engaged in the same wrongful conduct in connection with their servicing of the
loans for the Trusts.
494. For example, on December 16, 2011, investors provided notice to U.S. Bank and
four other RMBS trustees of, among other things, master servicer violations by JPMorgan and
JPMorgan predecessor entities (Bear Stearns and WaMu) in connection with $95 billion of
RMBS issued by various affiliates of JPMorgan from 243 trusts issued between 2005 and 2007
under the BALTA, BSABS, BSARM, BSMF, CFLX, CHASE, JPALT, JPMAC, JPMMT,
PRIME, SACCO, SAMI, WAMU and WMALT labels. The investors demanded that U.S. Bank
open an investigation of ineligible mortgages and deficient servicing of these loans. The
December 16, 2011 notice put U.S. Bank on notice of systemic deficient servicing practices by
JPMorgan and its affiliates, some of the largest servicers for the Trusts. Indeed, this same
investor group has reached a preliminary agreement with JPMorgan, which calls for the payment
of $4.5 billion in cash to the 330 trusts issued under these JPMorgan RMBS labels to settle
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mortgage repurchase and servicing claims, as well as for the implementation of substantial
servicing changes to mortgage loans in the covered trusts to rectify the pervasive servicing
deficiencies by JPMorgan and its affiliates.
495. Similarly, on January 31, 2012, an investor group issued instructions to Wells
Fargo, Deutsche Bank, and U.S. Bank, as trustees, to open investigations of ineligible mortgages
in pools securing over $25 billion of RMBS issued by various affiliates of Morgan Stanley and
deficient servicing of those loans.
496. On September 19, 2012, the same investor group sent a Notice of Non-
Performance (September 19, 2012 Notice) to U.S. Bank and other RMBS trustees, as well as
Wells Fargo, the servicer or Master Servicer, identifying breaches by Wells Fargo of specific
servicing covenants in PSAs for 149 trusts from the WFALT, WFMBS and WMLT shelves. The
September 19, 2012 Notice alleged that each of these servicing failures had materially affected
the rights of the Certificateholders and constituted ongoing events of default in the servicers
performance under the relevant PSAs. The April 10, 2012 Notice, coupled with the September
19, 2012 Notice put U.S. Bank on notice of systemic deficient servicing practices by Wells
Fargo, which is one of the largest originators, sponsors and servicers of loans in the Trusts.
C. U.S. Bank Had Knowledge Of The Servicers Failures
Through The Monthly Servicer And Remittance Reports
497. U.S. Bank and its responsible officers also knew of the servicers improper
servicing practices through the servicers servicing reports and the monthly remittance reports,
which U.S. Bank itself published. These reports detailed the Trusts increasing modifications,
staggering losses and write-downs due to the poor credit quality of the loans, but did not reflect
the servicers actions to enforce the sellers repurchase obligations. The reports similarly
reflected the servicers abuse of servicing advances.
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XII. U.S. BANK FAILED TO DISCHARGE ITS
CRITICAL PRE- AND POST-DEFAULT DUTIES
498. Despite U.S. Banks knowledge of the Trusts high default rates and poor
performance, breaches of representations and warranties made by the originators, sellers,
depositors, and sponsors, and servicer violations, U.S. Bank failed to perform its duties as
Trustee to protect the Trusts and Certificateholders.
A. Failure To Enforce The Trusts Repurchase Rights
499. As set forth above, beginning in 2009 and by 2011, U.S. Bank and its responsible
officers discovered the Trusts contained loans that materially breached the sellers
representations and warranties, which adversely affected the value of those mortgage loans and
the Trusts and Certificateholders interests in those mortgage loans. U.S. Bank further knew that
the servicers had failed to take appropriate steps to enforce the sellers obligations to cure,
replace or repurchase the affected loans, and that the failure on the part of the servicers to take
appropriate steps against the sellers was material.
500. U.S. Bank breached its contractual and statutory duties under TIA and was
negligent by failing to (i) provide notice to the servicers and/or the responsible sellers upon its
discovery of these breaches, and (ii) take any action to enforce the sellers repurchase of the
defective mortgage loans.
B. Failure To Provide Notice
To The Servicers Of Events Of Defaults
501. As set forth above, beginning in 2009 and continuing to the present, U.S. Bank
and its responsible officers knew of failures on the part of the servicers to observe or perform in
material respects their covenants or agreements in the PSAs, including the servicers (i) failure to
give notice to the other parties of seller breaches of representations and warranties upon
discovery thereof and enforce the sellers repurchase obligations; (ii) violations of prudent
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servicing obligations; (iii) violations of foreclosure obligations; (iv) violations of modification
obligations; and (v) improper servicing advances. These breaches by the servicers constituted
Events of Defaults as defined by the PSAs. U.S. Bank knew that these servicers breaches were
material.
502. U.S. Bank breached its contractual and statutory duties under TIA and was
negligent by failing to provide notice to the servicers of these Events of Defaults or terminating
the servicers.
C. Failure To Act Prudently Subsequent
To The Uncured Events Of Defaults
503. As set forth above the Events of Default occurred, remained uncured for the
requisite period of time and are continuing. Consequently, under the PSAs, U.S. Bank had and
continues to have the obligation to exercise the rights and powers vested in it by the PSAs, and to
use the same degree of care and skill in its exercise as a prudent person would exercise or use
under the circumstances in the conduct of such persons own affairs.
504. A prudent person would have taken action to protect the Trusts and its
Certificateholders from the known seller breaches of representations and warranties by
exercising all of its rights under the PSAs to enforce the sellers repurchase obligations, including
timely conducting an investigation to determine all of the materially breaching mortgage loans
and suing the sellers for specific performance to compel their repurchase of those loans. U.S.
Bank breached its contractual, statutory and fiduciary duties and was negligent by failing to act
prudently and taking these actions.
505. A prudent person would have also taken action to protect the Trusts and its
Certificateholders from the known Servicer violations by exercising all of its rights under the
PSAs to enforce the servicers prudent servicing obligations, including ensuring that all Events of
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Default were cured, terminating the servicers, substituting itself in as the substitute servicer or
replacing the servicers, and enforcing the servicers obligations to reimburse the Trusts for losses
caused as a result of their breaches through suit if necessary. U.S. Bank breached its contractual,
statutory and fiduciary duties and was negligent by failing to act prudently and taking these
actions.
D. Failure To Provide Notice To The
Certificateholders Of The Uncured Events Of Defaults
506. As set forth above the Events of Default occurred, remained uncured for the
requisite period of time and are continuing. Consequently, under the PSAs, U.S. Bank also had
and continues to have the obligation to provide all Certificateholders with notice of these Events
of Default.
507. U.S. Bank had no good faith reason for failing to provide notice of these Events
of Defaults to the Certificateholders. Consequently, U.S. Bank breached its contractual, statutory
and fiduciary duties and was negligent by failing to provide all Certificateholders with notice of
these Events of Default.
XIII. U.S. BANK FAILED TO PROTECT THE
TRUSTS DUE TO ITS CONFLICTS OF INTEREST
508. U.S. Bank failed and unreasonably refused to discharge its critical pre- and post-
default duties owed to the Trusts and the Certificateholders because acting to diligently protect
the interests of the Trusts would have conflicted with U.S. Banks own interests.
A. U.S. Bank Was Economically
Beholden To The Mortgage Loan Sellers
509. Trustees are selected by the sponsor, which is often an affiliate of the servicer.
While U.S. Bank was charged with representing the interests of the Trusts and all
Certificateholders, it was economically beholden to the sponsors. Indeed, U.S. Bank had close,
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repeat business relationships with most if not all of the sponsors. For example, U.S. Bank
received approximately 30% of its private-label residential mortgage securitization trusteeship
appointments from just three banks (Lehman Brothers, WaMu, and Wells Fargo) based on the
cumulative original face value of the offerings. And, the vast percentage of these banks
servicing business was conducted by their respective affiliates: Aurora (91.79%), Long
Beach/WaMu (96.99%), and Wells Fargo (95.32%). Accordingly, U.S. Bank was incentivized to
not require servicers to take necessary action because these servicers were affiliated with the
sponsors that provided valuable trustee appointments. In short, U.S. Bank failed to protect the
Trusts because it did not want to risk losing significant business from these sponsors.
B. U.S. Bank Was Engaged In The
Same Wrongful Servicing Activities
510. U.S. Bank failed and unreasonably refused to take action to protect the Trusts and
Certificateholders against seller breaches and servicer violations because it would have exposed
that U.S. Bank itself was engaged in the same servicing misconduct in its role as servicer for
other mortgages and RMBS trusts.
511. As noted above, during the fourth quarter of 2010, the Agencies conducted on-site
reviews of the adequacy of controls and governance over servicers foreclosure processes at U.S.
Bank. The reviews uncovered significant problems in foreclosure processing at U.S. Bank,
including critical weaknesses in [U.S. Banks] foreclosure governance processes, foreclosure
document preparation processes, and oversight and monitoring of third-party vendors, including
foreclosure attorneys.
27

27
See Interagency Review of Foreclosure Policies and Practices (Apr. 2011), available at
http://www.federalreserve.gov/boarddocs/rptcongress/interagency_review_foreclosures_201104
13.pdf.
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512. On April 13, 2011, based on the deficiencies in the review and the risk of
additional issues as a result of weak controls and processes, the Federal Reserve Board initiated
formal enforcement actions requiring U.S. Bancorp, the corporate parent of U.S. Bank, to
address its pattern of misconduct and negligence related to deficient practices in residential
mortgage loan servicing and foreclosure processing. According to the Federal Reserve Board
press release, [t]hese deficiencies represent significant and pervasive compliance failures and
unsafe and unsound practices at [U.S. Bancorp]. The enforcement action required U.S. Bancorp
to improve its residential mortgage loan servicing and foreclosure practices.
513. As part of the enforcement action, U.S. Bank entered into a consent order with the
Federal Reserve Board, which found that U.S. Bank had engaged in unsafe or unsound practices
with respect to the manner in which [U.S. Bank] handled various foreclosure and related
activities.
514. In addition, the OCC entered into consent orders with U.S. Bank and several other
servicers (the OCC Consent Orders). In the OCC Consent Order with U.S. Bank, the
government found, among other things, that beginning in 2009 U.S. Bank filed false or otherwise
defective affidavits in connection with foreclosure proceedings and failed to exercise adequate
oversight, internal controls, policies, and procedures, compliance risk management, internal
audit, third party management, and training for its foreclosure-related services.
515. Due to the fact that U.S. Bank itself was engaging in the same illicit and improper
acts as the servicers for the Trusts, U.S. Bank failed to enforce the servicer violations, or even
alert the Certificateholders to the servicers misconduct.
C. U.S. Bank Originated Defective Loans
516. U.S. Bank, as an originator for other RMBS trusts, sold hundreds of millions of
dollars of loans that breached its representations and warranties. Many of the same banks or
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their affiliate entities that act as servicers to the Trusts, similarly act as servicers to these trusts,
including MSM 2004-5AR, MSM 2004-6AR, MSM 2005-4, and SARM 2007-4. Like the
Trusts, all of these trusts have suffered write-downs and are afflicted by high delinquency rates.
517. Accordingly, because U.S. Bank itself faced enormous repurchase liability for
billions of dollars of loans sold in breach of representations and warranties, including U.S. Bank-
originated loans in RMBS trusts serviced by the same servicers as the Trusts, U.S. Bank was
disincentivized to take any action against the servicers for the Trusts, or even alert the
Certificateholders to servicer misconduct.
D. U.S. Bank Refused To Discharge
Its Duties In Order To Preserve Profits
518. U.S. Bank was also conflicted because discharging its critical pre- and post-
default duties owed to the Trusts and all Certificateholders would have necessarily diminished
U.S. Banks profits. Specifically, such conduct would have directly impaired U.S. Banks profits
by increasing costs and expenses while revenue remained unchanged. Indeed, rather than act
pursuant to its proscribed contractual, statutory, and common law duties, U.S. Bank failed and
unreasonably refused to enforce the sellers repurchase obligations and servicers prudent
servicing requirements in order to avoid the associated transactional costs of exercising the
Trusts rights against these entities or provoke the servicers to shine the light on U.S. Banks
own wrongful conduct.
519. For example, prior to a default under the TIA or an Event of Default under
the PSAs, U.S. Bank had minimal ministerial duties to perform.
28
Following a default under the
TIA or Event of Default under the PSAs, however, U.S. Banks obligations expand such that it

28
New York common law still imposed certain non-waivable duties on U.S. Bank both before
and after a default under the TIA or an Event of Default under the PSAs.
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must act as a prudent person. This requirement carries with it significant and more costly
responsibilities, including seeking direction from the certificateholders regarding the appropriate
actions it should take on behalf of the trusts. However, fulfilling these greater duties increases
costs while U.S. Banks compensation under the PSAs a fixed fee rate based on the unpaid
principal balance of the trust (typically less than one basis point) would remain unchanged.
520. Additionally, the occurrence of an Event of Default could lead to the termination
of the master servicer, which would have profound financial implications on U.S. Bank. If the
master servicer were terminated, U.S. Bank would have to retain a successor master servicer or
substitute itself in as the master servicer. The compensation that U.S. Bank or the successor
master servicer could obtain would be heavily restricted. For example, typical and more
lucrative servicing income, such as float, excess spread, and ancillary fees are prohibited for a
successor master servicer under the PSAs. Nevertheless, U.S. Bank or the successor master
servicer would be required to hold regulatory capital against the servicing rights.
521. Further, the occurrence of a default under the TIA or an Event of Default under
the PSAs requires U.S. Bank to provide notice of these defaults to the certificateholders. In
addition to alerting certificateholders to seller and servicer violations, the default notice would
expose U.S. Banks negligence in carrying out its ministerial duties, including its failure to
receive, process, maintain and hold all or part of the mortgage loan files as required under the
PSAs. Consequently, U.S. Banks providing notice to the certificateholders of defaults could
lead to potential liability or its removal as trustee of the Trusts.
522. Accordingly, the increased duties, costs and liability risk associated with
enforcing the Trusts rights against the above-described seller and servicer violations would
make U.S. Banks trusteeships less profitable and possibly unprofitable. For these reasons, U.S.
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Bank failed and unreasonably refused to enforce the Trusts rights against the sellers and
servicers.
XIV. CAUSATION
523. U.S. Banks failure and unreasonable refusal to enforce the Trusts rights against
the sellers and servicers, and its violations of its other contractual, statutory, fiduciary and
independence duties, along with its negligence, have directly and proximately caused billions of
dollars in Trust assets to waste away. The mortgage loans conveyed to the Trusts did not comply
with seller representations and warranties, but were instead of a lower quality, which increased
the risk of defaults in the principal and interest payments owed to the Trusts. Moreover, servicer
violations have exacerbated the Trusts losses. Had U.S. Bank performed its duties as Trustee, in
particular had it adequately enforced the obligations of the sponsors and originators to cure,
substitute, or repurchase mortgage loans that breached the representations and warranties, it
would have prevented the Trusts from incurring substantial losses and Trust assets from wasting
away. Had U.S. Bank enforced the Trusts rights against servicers for reimbursement of losses
caused by their misconduct as required, it would have benefited the Trusts and their
Certificateholders.
XV. DAMAGES
524. The Trusts have incurred substantial damages attributable to U.S. Banks breaches
of its contractual, statutory, fiduciary, and common law duties. In particular, the Trusts loan
pools are filled with loans of inadequate credit quality, which increased the risk of delinquency.
As a result of the loans poor credit quality, the Trusts have experienced enormous delinquency
rates, collateral write-downs, and losses, and have incurred and continued to incur significant
losses in connection with servicer violations. Damages incurred by the Trusts and caused by the
Trustees violation of law will be the subject of expert testimony for proof at trial.
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XVI. CAUSES OF ACTION
FIRST CAUSE OF ACTION

BREACH OF CONTRACT
(On Behalf Of The Trusts Against U.S. Bank)
525. Plaintiffs repeat and reallege each and every allegation set forth in the preceding
paragraphs as if fully set forth herein.
526. The PSAs are valid contracts that memorialize the issuance of certificates of
beneficial interests in the Trusts, and establish U.S. Banks contractual duties and obligations, in
its capacity as trustee, to the Trusts and all their respective Certificateholders. Each of the
relevant contractual provisions is substantively similar if not identical in all of the PSAs, and
imposes substantially the same if not identical duties and obligations on U.S. Bank in its capacity
as trustee.
527. Under each PSA, U.S. Bank owed a duty to the Trusts and all Certificateholders
(i) to give prompt written notice to all parties to the PSA of a breach of a representation or
warranty made by the seller in respect of the mortgage loans that materially and adversely affects
the value of any mortgage loan or the interests of the Certificateholders in any such mortgage
loan, upon U.S. Banks discovery of the breach; and (ii) to take such action with respect to the
breach as may be necessary or appropriate to enforce the rights of the Trusts with respect to the
breach.
528. As set forth above, U.S. Bank materially breached each PSA by (i) failing to
provide prompt written notice to all parties to the PSA and related responsible parties of breaches
of the sellers mortgage loan representations and warranties, upon [U.S. Banks] discovery of the
breaches; and (ii) failing to enforce the sellers obligation to repurchase, substitute, or cure such
defective mortgage loans.
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529. In addition, the PSAs required U.S. Bank, upon an Event of Default to
(i) provide written notice to all Certificateholders of the Event of Default within sixty days of its
occurrence, unless the Event of Default was cured or waived; and (ii) exercise the rights and
powers vested in U.S. Bank by the PSA using the same degree of care and skill as a prudent
person would exercise or use under the circumstances in the conduct of such persons own
affairs.
530. The PSAs define an Event of Default to include the failure by the servicer to
observe or perform in any material respect the covenants or agreements by the servicer set forth
in the PSA, which continues unremedied for no more than thirty to sixty days after written notice
of the failure has been given to the servicer by the trustee requiring the same to be remedied, or
actual knowledge of the failure by a Servicing Officer of the servicer, whichever is earlier.
531. Events of Default have occurred, remained uncured for the applicable period of
time, and are continuing as a result of the servicers failure to observe and perform, in material
respects, the covenants and agreements imposed on them by the PSAs.
532. The servicers have failed and refused to do the following, each of which has
materially impaired the rights of the Trusts and all Certificateholders:
(a) Breaches of Representations and Warranties. As with the trustee, the
PSAs required the servicers to give prompt written notice to all parties to
the PSAs of a breach of a representation or warranty made by the seller in
respect of the mortgage loans that materially and adversely affects the
value of any mortgage loan or the interests of the Certificateholders in any
such mortgage loan, upon the servicers discovery of such breach. The
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servicers have failed to give notice to the other parties of the following
information, which has exacerbated losses experienced by the Trusts:
(i) although servicers often modify mortgage loans, and in the process
of doing so have discovered that specific loans breached applicable
representations and warranties, the servicers have not notified the
other parties of these breaches;
(ii) although there has been widespread public evidence of pervasive
breaches of applicable representations and warranties, and
although the servicers have been specifically notified by insurers
and Certificateholders of these pervasive breaches, the servicers
have not notified the other parties to the PSAs (including U.S.
Bank) of these breaches; and
(iii) although aware of specific mortgage loans that breach applicable
representations and warranties, the servicers have failed to enforce
the sellers obligation to repurchase, substitute, or cure the
defective loans as required under the PSAs.
(b) Violation of Prudent Servicing Obligations. The PSAs require the servicer
service and administer the mortgage loans for and on behalf of the
Certificateholders, and, consistent with the PSAs, (i) in the same manner
in which it services and administers similar mortgage loans for its own
portfolio or for other third parties, giving due consideration to customary
and usual standards of practice of prudent institutional mortgage lenders
servicing similar loans, (ii) with a view to maximizing the recoveries with
-191-
respect to the mortgage loans on a net present value basis, and (iii) without
regard to, among other things, the servicers right to receive compensation
or other fees for its services under the PSA, the servicers obligation to
make servicing advances under the PSA, and the servicers ownership,
servicing or management for others of any other mortgage loans. In
violation of their prudent servicing obligations under the PSAs, the
servicers have:
(i) failed to maintain accurate and adequate loan and collateral files in
a manner consistent with prudent mortgage servicing standards;
(ii) failed to timely and accurately apply payments made by borrowers
and maintain accurate account statements;
(iii) failed to demand that the sellers cure deficiencies in mortgage
records when deficient loan files and lien records are discovered;
(iv) imposed force-placed insurance when the servicers knew or should
have known that borrowers already had adequate coverage;
(v) incurred completely avoidable and unnecessary servicing fees and
servicing advances to maintain the mortgaged properties; and
(vi) prejudiced the interests of the Trusts and the Certificateholders in
the mortgages by fostering uncertainty as to the timely recovery of
collateral.
(c) Violation of Foreclosure Obligations. The PSAs require the servicers to
use their best efforts, consistent with accepted servicing practices, to
foreclose upon or otherwise comparably convert the ownership of
-192-
properties securing mortgage loans that come into and continue in default
and as to which no satisfactory arrangements can be made for collection of
delinquent payments. Moreover, each of the PSAs contemplates that
foreclosures and liquidations of defaulted mortgages will proceed
forthwith and in accordance with applicable law, provided the
documentation is in order, as a matter of fairness to all parties. Despite
these covenants, the servicers have:
(i) continued to keep defaulted mortgage loans on their books, rather
than foreclose or liquidate the loans, in order to wrongfully
maximize their servicing fees, at the expense of the Trusts and
Certificateholders best interests, including the right to recover
from pool or financial guaranty insurance policies;
(ii) failed to maintain records in an accurate, appropriate and adequate
manner, which has impeded the process of foreclosure and
liquidation of defaulted mortgages and caused wholly avoidable
delays that have injured the Trusts and Certificateholders;
(iii) continued to charge unearned and unwarranted servicing fees on
mortgages that would have been liquidated but for the servicers
breach of their duties, as well as unauthorized fees for default-
related services; and
(iv) failed to place the interests of the Trusts and Certificateholders
before their own interests.
-193-
(d) Violation of Modification Obligations. The PSAs provide that the
servicers agree to a modification of any mortgage loan only in specified
circumstances. When modifications are required to remedy predatory
lending violations, the PSAs require the seller not the Trusts or the
Certificateholders to bear the costs to cure the violations. The servicers
have breached the PSAs by agreeing to modify loans held in the Trusts to
settle predatory lending claims made by various Attorneys General
against their parent companies while breaching their obligation to demand
that the offending mortgage sellers (their parent companies) bear the costs
of curing the violations, as well as the expenses reasonably incurred in
enforcement of the sellers obligation to cure predatory mortgages. The
servicers have also unjustly enriched their parent companies by using
Trust collateral to settle claims that were not, and could never be, made
against the Trusts, in a manner that has materially and adversely affected
the interests of the Certificateholders. The servicers have therefore failed:
(i) to demand that the originators and sponsors comply with their
obligation to cure or repurchase predatory and ineligible loans that
the servicers agreed to modify in the Attorneys General
settlements; and
(ii) to deliver to the trustees a certification of a servicing officer that all
requirements have been satisfied with respect to the modified
mortgage loan.
-194-
(e) Improper Servicing Advances: The PSAs provide that the servicers may
recover servicing advances that are customary, reasonable and necessary
out-of-pocket costs and expenses incurred in the performance by the
servicer of its servicing obligations, including but not limited to the cost of
the preservation, restoration, and protection of a mortgaged property.
Despite the requirement that servicing advances be incurred only for
reasonable and necessary out-of-pocket costs, the servicers instead utilized
affiliated vendors which marked up their services to a level 100% or
more above the market price to provide services related to the
preservation, restoration, and protection of mortgaged property, in a
fraudulent, unauthorized, and deceptive effort to supplement the servicers
servicing income.
533. U.S. Bank and its responsible officers had knowledge of these and other defaults
by the servicers through, among other things, public reports, lawsuits, exception reports, and the
increasing delinquency and loss rates for the Trusts. Nevertheless, U.S. Bank failed to deliver
written notices to the servicers of the defaults or terminate the servicers. Similarly, U.S. Bank
failed to provide Certificateholders with notice of these Events of Default. By failing to take
these actions, U.S. Bank materially breached the PSAs.
534. These Events of Default occurred, remained uncured for the requisite period of
time and are continuing. Consequently, under the PSAs, U.S. Bank had and continues to have
the obligation to exercise the rights and powers vested it by the PSAs, and to use the same degree
of care and skill in their exercise as a prudent person would use under the circumstances in the
conduct of the persons own affairs. A prudent person would have exercised all of the trustees
-195-
rights to recover for these Events of Default, and would have done so promptly. By failing to
take this action, U.S. Bank materially breached the PSAs.
535. U.S. Banks material breaches of the PSAs have directly and proximately caused
damages to the Trusts in that they have deprived the Trusts of valuable remedies and allowed
hundreds of billions of dollars in Trust assets to waste away. For example, had U.S. Bank
protected the rights of the Trusts by enforcing the sellers obligation to cure, repurchase, or
substitute mortgage loans affected by breaches of representations and warranties, the Trusts
would have received either cured or substitute mortgage loans of adequate credit quality or funds
representing the Repurchase Price with respect to each defective mortgage loan. U.S. Banks
inaction with respect to the sellers has allowed the Trusts to be filled with defective mortgage
loans of poor credit quality that have increased the severity of the Trusts losses. Similarly, had
U.S. Bank enforced the servicers prudent servicing obligations, the Trusts would have been able
to avoid incurring unnecessary losses and expenses. U.S. Banks inaction with respect to the
servicing violations has exacerbated losses experienced by the Trusts.
536. U.S. Banks material breaches of the PSAs have injured all Certificateholders,
including Plaintiffs, in that they have diminished the value of the certificates held by the
Certificateholders and have prevented the Certificateholders from protecting the rights of the
Trusts as well as their own rights.
537. The Trusts and each of the Plaintiffs have performed all of the conditions,
covenants, and promises required in accordance with each of the PSAs.
-196-
SECOND CAUSE OF ACTION

VIOLATION OF THE TRUST INDENTURE ACT OF 1939, 53 STAT. 1171
539. Congress enacted the TIA to ensure, among other things, that investors in
certificates, bonds, and similar instruments have adequate rights against, and receive adequate
performance from, the responsible trustees.
540. Each of the PSAs is an indenture, and U.S. Bank is an indenture trustee,
within the meaning of the TIA. 15 U.S.C. 77ccc(7), (10). As noted above, each of the PSAs is
substantially similar and imposes substantially the same duties on U.S. Bank in its capacity as
trustee. Moreover, the TIA applies to and is deemed to be incorporated into each of the PSAs
and the related Trusts. 15 U.S.C. 77ddd(a)(1). U.S. Bank has violated multiple provisions of
the TIA.
541. First, the TIA requires that, before default, the indenture trustee shall be liable for
any duties specifically set out in the indenture. 15 U.S.C. 77000(a)(1). As set forth above, U.S.
Bank has failed to comply, in good faith, with numerous duties specifically assigned to it by each
of the PSAs, including the duties:
(a) to provide prompt written notice to all parties to the PSA and related
responsible parties of breaches of the sellers representations and
warranties, upon U.S. Banks discovery of the breaches;
(b) to enforce the sellers obligations to repurchase, substitute, or cure
defective mortgage loans; and
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(c) to enforce the servicers obligations to observe and perform covenants and
agreements set forth in the PSAs, including requiring the originators and
sponsors to perform their respective obligations and to service and
administer the mortgage loans in accordance with applicable law and
customary and usual standards of practice of mortgage lenders and loan
servicers.
542. By failing to comply with these specific duties, U.S. Bank violated the TIA.
543. In addition, the TIA requires that U.S. Bank inform Certificateholders of defaults
within ninety days after their occurrence. 15 U.S.C. 77ooo(b) (citing 15 U.S.C. 77mmm(c)).
Here, there were numerous defaults, including (i) the failure of originators and sponsors to
repurchase or substitute defective or nonconforming loans in the Trusts; and (ii) the failure on the
part of the servicers to observe and perform covenants and agreements set forth in the PSAs,
including requiring the originators and sponsors to perform their respective obligations and
servicing and administering the mortgage loans in accordance with applicable law and customary
and usual standards of practice of mortgage lenders and loan servicers. Given the great
importance of those defaults to the Certificateholders interests, U.S. Bank had no good faith
reason for failing to provide notice of those defaults. Accordingly, by failing to provide this
notice, U.S. Bank violated the TIA.
544. Second, in case of default, the TIA requires that U.S. Bank exercise its rights and
powers under the PSA as a prudent person would, under those circumstances, in the conduct of
the persons own affairs. 15 U.S.C. 77000(c). Again, given the obvious importance of the
defaults set forth in the preceding paragraph, which impaired the rights of the Trusts, any prudent
person under those circumstances would have exercised all of the trustees rights to, among other
-198-
things, enforce the sponsors and originators obligation to repurchase, substitute, or cure
defective mortgage loans, and a prudent person would have exercised those rights promptly.
Indeed, with the number of delinquent and defaulting mortgages in the Trusts increasing, as a
result, inter alia, of these defects, the Trusts could only have been protected from the resulting
losses through the trustees prompt exercise of those rights, which were designed precisely to
limit the number of delinquent and defaulting mortgages in the Trusts. By failing to exercise its
rights in those circumstances, U.S. Bank violated the TIA.
545. U.S. Banks violations of the TIA have directly and proximately caused damages
to the Trusts in that they have deprived the Trusts of valuable remedies and allowed hundreds of
billions of dollars in Trust assets to waste away. For example, had U.S. Bank protected the rights
of the Trusts by enforcing the originators and sponsors obligation to cure, repurchase, or
substitute mortgage loans affected by breaches of representations and warranties, as it was
contractually obligated to do under the PSAs, the Trusts would have received either cured or
substitute mortgage loans of adequate credit quality or funds representing the Repurchase Price
of the defective mortgage loans. U.S. Banks inaction with respect to the originators and
sponsors has allowed the Trusts to be filled with defective mortgage loans of poor credit quality
and significant documentation deficiencies that have increased the severity of the Trusts losses.
Similarly, had U.S. Bank enforced the servicers servicing obligations, the Trusts would have
been able to avoid unnecessary losses. U.S. Banks inaction with respect to the servicers has
exacerbated losses experienced by the Trusts.
546. U.S. Banks violations of the TIA have injured all Certificateholders, including
Plaintiffs, in that they have diminished the value of the certificates held by the Certificateholders
-199-
and have prevented the Certificateholders from protecting the rights of the Trusts as well as their
own rights.
THIRD CAUSE OF ACTION

NEGLIGENCE - BREACH OF PRE-DEFAULT DUTY OF INDEPENDENCE
548. Under New York law, U.S. Bank, as Trustee, had certain extra-contractual, pre-
default duties to the Trusts and all Certificateholders. These duties include the absolute,
unwaivable duty to give the Trusts and their Certificateholders undivided loyalty, free from any
conflicting self-interest. Trustees like U.S. Bank must discharge their obligations with absolute
singleness of purpose because of the inability of the Trusts and dispersed Certificateholders to
enforce their rights. This common law duty to avoid conflicts of interest applies notwithstanding
the terms of the instrument that purports to define the duties of the trustee.
549. Under each of the PSAs, U.S. Bank holds the loans for the benefit of the Trusts
and all Certificateholders, including Plaintiffs.
550. Under each of the PSAs, U.S. Bank had the discretion to enforce the sellers
repurchase obligations and to prevent the servicers from engaging in activities outside of
customary and usual standards of practice of prudent mortgage servicers with respect to any
mortgage loans that U.S. Bank held for the benefit of the Trusts and the Certificateholders.
551. As alleged in detail above, U.S. Bank knew of seller breaches of representations
and warranties and that the servicers were engaging in activities outside of customary and usual
standards of practice of prudent mortgage servicers with regard to their servicing and
administration of the mortgage loans in the Trusts.
-200-
552. As alleged herein, however, U.S. Bank was economically beholden to the sellers.
In addition, in their capacity as originator and sponsor with regard to other mortgage loans and
RMBS trusts, U.S. Banks affiliates had sold loans in breach of specific representations and
warranties to RMBS trusts in which many of the same sellers, servicers or their affiliates were
serving as servicers or trustees.
553. Because U.S. Bank was economically beholden to the sellers and that it faced
repurchase liability for the sale and securitization of its own loans in breach of its representations
and warranties, U.S. Bank has failed to take any action against the servicers, or even alert the
Certificateholders that the servicers were engaged in misconduct.
554. U.S. Banks negligent breach of its pre-default duty of independence has directly
and proximately caused damages to the Trusts. For example, had U.S. Bank not been conflicted,
it would have enforced the sellers repurchase obligations and exercised its discretion to prevent
the servicers from engaging in activities outside of customary and usual standards of practice of
prudent mortgage servicers with respect to any mortgage loans. U.S. Banks inaction has
relieved the sellers of their repurchase liability, and allowed the servicers to charge improper
fees that have been passed along to the Trusts and to delay in foreclosing on mortgage loans,
which has increased the costs of foreclosure.
555. U.S. Banks negligent breaches of its pre-default duty of independence have
injured all Certificateholders, including Plaintiffs, in that they have diminished the value of the
certificates held by the Certificateholders and have prevented the Certificateholders from
protecting the rights of the Trusts as well as their own rights.
-201-
FOURTH CAUSE OF ACTION

BREACH OF FIDUCIARY DUTY DUTY OF CARE
557. Under New York law, after the occurrence of an Event of Default, U.S. Banks
duties expanded to include a fiduciary duty owed to the Trusts and all Certificateholders. This
fiduciary duty included the obligation to exercise its contractually conferred rights and powers in
good faith and to bring all available claims for the benefit of the Trusts and the Certificateholders
following an Event of Default. Following the Events of Defaults described above, U.S. Bank
breached its fiduciary duties to the Trusts and all Certificateholders in several respects.
558. First, U.S. Bank, in its capacity as Trustee, had standing to bring claims against
the sellers of the Trusts for breach of their representations and warranties under the governing
agreements. At the time of the Events of Default, meritorious claims existed against the sellers
for breach of their representations and warranties under the governing agreements. U.S. Bank,
however, failed to promptly enforce the sellers obligation to cure, repurchase, or substitute
mortgage loans that had defective mortgage files or were affected by breaches of the sponsors
and originators representations and warranties, including by filing suits on behalf of the Trusts
against the sponsors and originators. Moreover, U.S. Bank failed to provide notice to the
Certificateholders of the breaches or of its intention not to enforce the originators and sponsors
obligation to cure, repurchase, or substitute the loans with defective mortgage files and breaches
of representations and warranties.
559. U.S. Banks failure to promptly enforce the originators and sponsors obligation
to cure, repurchase, or substitute mortgage loans with defective mortgage files and mortgage
-202-
loans affected by breaches of the originators and sponsors representations and warranties, as
well as its failure to provide notice to the Certificateholders of its intention not to promptly
enforce the originators and sponsors obligation to cure, repurchase, or substitute mortgage loans
with defective mortgage files and mortgage loans affected by breaches of the originators and
sponsors representations and warranties, constituted breaches of U.S. Banks fiduciary duty to
the Trusts and to all Certificateholders.
560. Second, U.S. Bank, in its capacity as Trustee, presently has standing to bring
meritorious claims against the servicers to enforce the servicers obligations to observe and
perform covenants and agreements set forth in the PSAs, including to service and administer the
mortgage loans in accordance with applicable law and customary and usual standards of practice
of mortgage lenders and loan servicers. U.S. Bank, however, has refused and continues to refuse
to enforce the servicers obligations to observe and perform covenants and agreements set forth
in the PSAs, including by filing suits on behalf of the Trusts against the servicers for
compensatory and injunctive relief for harm caused to the Trusts as a result of servicing
violations. Moreover, U.S. Bank failed to provide notice to the Certificateholders of the
servicing violations or of its intention not to enforce the servicers obligations to observe and
perform covenants and agreements set forth in the PSAs. U.S. Banks failure to enforce the
servicers obligations to observe and perform covenants and agreements set forth in the PSAs, as
well as its failure to provide notice to the Certificateholders of the servicing violations or of its
intention not to enforce the servicers obligations to observe and perform covenants and
agreements set forth in the PSAs, constituted breaches of U.S. Banks fiduciary duty to the Trusts
and to all Certificateholders.
-203-
561. U.S. Banks breach of its fiduciary duty has directly and proximately caused
damages to the Trusts. Specifically, the Trusts injury includes the loss of verdicts, settlements,
or awards, and the interest that the Trusts would have recovered against the sellers and servicers
but for U.S. Banks breach of its fiduciary duty.
562. U.S. Banks breaches of its fiduciary duty have injured all Certificateholders,
including Plaintiffs, in that they have diminished the value of the certificates held by the
Certificateholders and have prevented the Certificateholders from protecting the rights of the
Trusts as well as their own rights.
FIFTH CAUSE OF ACTION

NEGLIGENCE DUTY OF CARE
564. Under New York law, after the occurrence of an Event of Default, U.S. Bank
owed duties to the Trusts and all Certificateholders, which included the obligation to bring all
available claims for the benefit of the Trusts and the Certificateholders. Following the Events of
Default described above, U.S. Bank breached its duties to the Trusts and to all Certificateholders
in several respects.
565. First, U.S. Bank, in its capacity as Trustee, had standing to bring claims against
the sellers of the Trusts for breach of their representations and warranties under the governing
agreements. At the time of the Events of Default, meritorious claims existed against the sellers
for breach of their representations and warranties under the governing agreements. U.S. Bank,
however, negligently failed to promptly enforce the sellers obligation to cure, repurchase, or
substitute mortgage loans that had defective mortgage files or were affected by breaches of the
-204-
sponsors and originators representations and warranties, including by filing suits on behalf of
the Trusts against the sponsors and originators. Moreover, U.S. Bank negligently failed to
provide notice to the Certificateholders of the breaches or of its intention not to enforce the
originators and sponsors obligation to cure, repurchase, or substitute the loans with defective
mortgage files and breaches of representations and warranties.
566. U.S. Banks failure to promptly enforce the originators and sponsors obligation
to cure, repurchase, or substitute mortgage loans with defective mortgage files and mortgage
loans affected by breaches of the originators and sponsors representations and warranties, and
failure to provide notice to the Certificateholders of the breaches or of its intention not to
promptly enforce the originators and sponsors obligation to cure, repurchase, or substitute
mortgage loans with defective mortgage files and mortgage loans affected by breaches of the
originators and sponsors representations and warranties, constituted negligence.
567. Second, U.S. Bank, in its capacity as Trustee, presently has standing to bring
meritorious claims against the servicers to enforce the servicers obligations to observe and
perform covenants and agreements set forth in the PSAs, including to service and administer the
mortgage loans in accordance with applicable law and customary and usual standards of practice
of mortgage lenders and loan servicers. U.S. Bank, however, has refused and continues to refuse
to enforce the servicers obligations to observe and perform covenants and agreements set forth
in the PSAs, including by filing suits on behalf of the Trusts against the servicers for
compensatory and injunctive relief for harm caused to the Trusts as a result of servicing
violations. Moreover, U.S. Bank negligently failed to provide notice to the Certificateholders of
the servicing violations or of its intention not to enforce the servicers obligations to observe and
perform covenants and agreements set forth in the PSAs. U.S. Banks failure to enforce the
-205-
servicers obligations to observe and perform covenants and agreements set forth in the PSAs, as
well as its failure to provide notice to the Certificateholders of the servicing violations or of its
intention not to enforce the servicers obligations to observe and perform covenants and
agreements set forth in the PSAs, constituted breaches of its duty to the Trusts and all
Certificateholders.
568. U.S. Banks negligence has directly and proximately caused damages to the
Trusts. Specifically, the Trusts injury includes the loss of verdicts, settlements, or awards, and
the interest that the Trusts would have recovered against the originators and sponsors but for U.S.
Banks negligence.
569. U.S. Banks negligence has injured all Certificateholders, including Plaintiffs, in
that it has diminished the value of the certificates held by the Certificateholders and has
prevented the Certificateholders from protecting the rights of the Trusts as well as their own
rights.
SIXTH CAUSE OF ACTION

BREACH OF FIDUCIARY DUTY
BREACH OF POST-DEFAULT DUTY OF INDEPENDENCE

571. Under New York law, U.S. Bank, as Trustee, had certain extra-contractual, post-
default duties to the Trusts and all Certificateholders. These duties include the absolute,
unwaivable duty to give the Trusts and their Certificateholders undivided loyalty, free from any
conflicting self-interest. Trustees like U.S. Bank must discharge their obligations with absolute
singleness of purpose because of the inability of the Trusts and dispersed Certificateholders to
-206-
enforce their rights. This common law duty to avoid conflicts of interest applies notwithstanding
the terms of the instrument that purports to define the duties of the trustee.
572. Under each of the PSAs, U.S. Bank holds the loans for the benefit of the Trusts
and all Certificateholders, including Plaintiffs.
573. Under each of the PSAs, U.S. Bank had the discretion to enforce the sellers
repurchase obligations and to prevent the servicers from engaging in activities outside of
customary and usual standards of practice of prudent mortgage servicers with respect to any
mortgage loans that U.S. Bank held for the benefit of the Trusts and the Certificateholders.
574. As alleged in detail above, after Events of Defaults, U.S. Bank knew of seller
breaches of representations and warranties and that the servicers were engaging in activities
outside of customary and usual standards of practice of prudent mortgage servicers with regard
to their servicing and administration of the mortgage loans in the Trusts.
575. As alleged herein, however, U.S. Bank was economically beholden to the sellers.
In addition, in their capacity as originator and sponsor with regard to other mortgage loans and
RMBS trusts, U.S. Banks affiliates had sold loans in breach of specific representations and
warranties to RMBS trusts in which many of the same sellers, servicers or their affiliates were
serving as servicers or trustees.
576. Because Wells Fargo was economically beholden to the sellers and faced
repurchase liability for the sale and securitization of its own loans in breach of its specific
representations and warranties, U.S. Bank has failed to take any action against the servicers, or
even notify the Certificateholders that the servicers were engaged in this misconduct.
577. U.S. Banks breach of its post-default fiduciary duty of independence has directly
and proximately caused damages to the Trusts. For example, had U.S. Bank not been conflicted,
-207-
it would have enforced the sellers repurchase obligations and exercised its discretion to prevent
the servicers from engaging in activities outside of customary and usual standards of practice of
prudent mortgage servicers with respect to any mortgage loans. U.S. Banks inaction has
relieved the sellers of their repurchase liability, and allowed the servicers to charge improper
fees that have been passed along to the Trusts and to delay in foreclosing on mortgage loans,
which has increased the costs of foreclosure.
578. U.S. Banks breaches of its post-default fiduciary duty of independence have
injured all Certificateholders, including Plaintiffs, in that they have diminished the value of the
certificates held by the Certificateholders and have prevented the Certificateholders from
protecting the rights of the Trusts as well as their own rights.
XVII. RELIEF REQUESTED
WHEREFORE, Plaintiffs demand judgment as follows:
(a) Determining that this action is a proper derivative action maintainable under law
and demand is excused;
(b) Awarding to the Trusts money damages against U.S. Bank for all losses suffered
as a result of U.S. Banks breaches of contractual, statutory, common law and fiduciary duties,
and U.S. Banks negligence;
(c) Requiring U.S. Bank to take corrective actions, including taking all necessary
actions to reform and improve its internal policies and procedures to comply with its trustee
obligations under the PSAs and applicable laws, and to protect the Trusts and the
Certificateholders from a repeat of the damaging events described herein;
(d) Awarding to Plaintiffs the costs and disbursements of the action, including
reasonable attorneys fees, accountants and experts fees, costs, and expenses; and
(e) Granting any other and further relief that the Court deems just and proper.
-208-
XVIII. JURY DEMAND
Plaintiffs demand a trial by jury.
Dated: June 18, 2014 BERNSTEIN LITOWITZ BERGER
& GROSSMANN LLP

/s/ Blair A. Nicholas
BLAIR A. NICHOLAS

BLAIR A. NICHOLAS (pro hac pending)
TIMOTHY A. DELANGE (pro hac pending)
BENJAMIN GALDSTON (pro hac pending)
12481 High Bluff Drive, Suite 300
San Diego, CA 92130
Tel: (858) 793-0070
Fax: (858) 793-0323

-and-

/s/ Jeroen Van Kwawegen
JEROEN VAN KWAWEGEN

JEROEN VAN KWAWEGEN (JV-1010)
JAI CHANDRASEKHAR (Bar No. 3908563)
1285 Avenue of the Americas, 38
th
Floor
New York, NY 10019
Tel: (212) 554-1400
Fax: (212) 554-1444

Counsel for Plaintiffs

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SUPREME COURT OF THE STATE OF NEW YORK

COUNTY OF NEW YORK

AR Strategy Fund is a Certificateholder in the Trusts identified in

AR Strategy Fund is a Certificateholder in the

AR Strategy Fund is a Certificateholder in

AR Strategy Fund has been a Certificateholder of these Trusts at the

Strategy Fund is a business

Strategy Fund has been a Certificateholder of these Trusts

is a Certificateholder in the Trusts identified in Exhibit 1 attached

-PLUS AR Fund is a Certificateholder in the Trusts identified in Exhibit 1

-PLUS AR Fund has

AR Fund is a Certificateholder in the Trusts identified in Exhibit 1 attached hereto.

AR Fund has been a Certificateholder of

Strategy Bond Fund is a

Strategy Bond Fund is a Certificateholder in the Trusts identified in Exhibit 1

Strategy Bond Fund has been a

AR Strategy Fund (U.S. Dollar-Hedged) is a

AR Strategy Fund (U.S. Dollar-Hedged) has been a Certificateholder

AR Strategy Fund (Unhedged) is a Certificateholder in the Trusts

AR Strategy Fund has been a Certificateholder of these Trusts

Absolute Return Fund is a

Absolute Return Fund is a

AR Short Strategy Fund is a

AR Short Strategy Fund is

Fund is a Massachusetts business

Fund is a Certificateholder of the Trusts identified

Fund has been a

Long Duration Fund is a

Long Duration Fund is a

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