Association of Mortgage Investors Letter To JPMorgan Trust Administration RE: Notification of and Request to Address Pervasive Issues in RMBS Trusts
AMI Calls Upon RMBS Trustees to Carry Out Fundamental Responsibilities;
Private Capital Will Not Return to the Market without Transparency
Washington, D.C. – The Association of Mortgage Investors (AMI) today sent letters to the major Trustees regarding their obligations under the pooling and servicing agreements (“PSAs”) governing residential mortgage-backed security (RMBS) Trusts. In sum, AMI’s reminds the Trustees of their legal responsibilities to RMBS certificate holders, ranging from state pensions, retirement systems, to life-insurers, including:
- Trustees Cannot be Negligent. Trustees cannot turn a “blind eye” to understanding pertinent facts and breach issues regarding the underlying collateral for RMBS, namely they cannot ignore the fact that breaches exist on the underlying mortgage loans.
- Transparency. Upon the discovery of Events of Default or representation or warranty breaches, Trustees must notify the appropriate parties and maintain transparency for these beneficiaries as well. They have obligations to provide investors with access to relevant deal documents, servicer notes, loan files, and other pertinent information. In situations where a party may be unwilling to cooperate, the Trustee must act accordingly.
- Action. In light of evidence of servicer Events of Default or breaches of any party’s representations and warranties, the Trustee is required to take appropriate action.
“The U.S. housing market place will neither function properly nor will private capital return to the market unless the Trustees take the actions required by law,” noted AMI Executive Director, Chris Katopis. “Many public institutions will suffer as a result of the Trustees turning the other way in light of blatant evidence of servicer breaches,” he continued. “At the heart of this situation are the actions of several entities – which as originators and as servicers — have shown an unwillingness to follow their contractual obligations and to make fair restitution to the investors including the public institutions investing in the U.S. RMBS market,” he also noted. AMI continues to advocate tirelessly for RMBS investors, so that RMBS Trustees may promptly resolve these issues, without investors resorting to costly and time consuming litigation to vindicate their legal rights.