Ambac Assurance Coro. v. EMC Mortgage LLC

In Ambac Assurance Corp. v. EMC Mtge. LLC (121 AD3d 514 [2014]) (Ambac [EMC]), the Court held, based on the terms of the PSAs, that Ambac did not have standing to enforce the PSAs. As summarized by the Court, the PSAs named Ambac "as a third-party beneficiary with respect to the rights of the insured certificateholders." (Id. at 516.) Moreover, "under section 2.03 of the PSAs, the trustee [was] expressly named as the party with authority to enforce the repurchase protocol. Also under that section, the depositor, 'on behalf of the Trust for the benefit of the Certificateholders and the Certificate Insurer Ambac,' assigned to the trustee all of its rights under the MLPAs." (Id.) As the Court emphasized, section 2.03 "provide[d] that the depositor's 'right, title and interest' in the MLPAs, including the repurchase protocol, [was] assigned into the securitization trust 'on behalf of both the certificateholders and the certificate insurer and confers upon the trustee the full responsibility for enforcing the repurchase protocol on their behalf." (Id., at 519.) In Ambac Assurance Coro. v. EMC Mortgage LLC (121 AD3d 514 [1st Dept 2014] [Ambac/EMC], affg 39 Misc. 3d 1240(A), 975 N.Y.S.2d 364, 2013 WL 2919062 [Sup Ct, NY County June 13, 2013 [Ramos, J.] the mono line insurer argued that the repurchase protocol, which was the sole remedy for breaches of representations regarding individual loans, was inapplicable to a transaction-level warranty that the offering materials describing the mortgage loans as a whole "did not include untrue statements of material fact." (Id. at 515.) The Court reasoned that this asserted transaction-level warranty "largely relate[d] to, and overlap[ped] with" the loan-level warranties. (Id. at 518.)