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Foreclosure-Gate: And So It Begins.... (Countrywide Breach of PSA)

Well well well what do we have here? HOUSTON, Oct. 18 /PRNewswire/ --Today, the holders of over 25% of the Voting Rights in more than $47 billion of Countrywide-issued RMBS sent a Notice of Non-Performance (Notice) to Countrywide Home Loan Servicing, as Master Servicer ("Countrywide Servicing"), and to Bank of New York, as Trustee, identifying specific covenants in 115 Pooling and Servicing Agreements (PSAs) that the Holders allege Countrywide Servicing has failed to perform. The Holders' Notice alleges that each of these failures has materially affected the rights of the Certificateholders under the relevant PSAs. Under Section 7.01 of the PSAs, if any of the cited failures "continues unremedied for a period of 60 days after the date on which written notice of such failure has been given ... to the Master Servicer and the Trustee by the Holders of Certificates evidencing not less than 25% of the Voting Rights evidenced by the Certificates," that failure constitutes an Event of Default under the PSAs. Uh huh. Gee, three years on, but here it is, and here it comes.... I wonder if there might be a lack of conveyance, for instance? Or maybe some loans in there that wantonly violated the representations and warranties? Oh wait - they tell us what (at least part) of their complaint is: Instead, it urges the Trustee to enforce Countrywide Servicing's obligations to service loans prudently by maintaining accurate loan records, demanding the repurchase of loans that were originated in violation of underwriting guidelines, and compelling the sellers of ineligible or predatory mortgages to bear the costs of modifying them for homeowners or repurchasing them from the Trusts' collateral pools. Uh huh. $47 billion in the pools eh? Uh, that could smart a bit, seeing as it's going to land straight back on Bank of America. So much for "no material impact" eh? Incidentally, do you think BAC knew this was going to come out tonight when they issued their little press release this afternoon claiming that they were all ok with the "Robosigning" nonsense? I said up front that the robosigning deal and all the sound and fury related to it was a diversion intended to cover up the original failures in the underwriting and securitization process.

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