On January 9, 2015, in a series of rulings, Judge P. Kevin Castel of the United States Court for the Southern District of New York granted in part and denied in part motions for partial summary judgment brought by three MASTR Adjustable Rate Mortgages Trusts (2006-OA2, 2007-1, and 2007-3) (the Trusts) and UBS Real Estate Securities Inc. (UBS). The Trusts filed this repurchase claim against UBS after purchasing 17,082 loans, which the Trusts claimed contained breaches of the Pooling and Servicing Agreements' representations and warranties. First, Judge Castel held that, as a general matter, the Trust could only proceed on loans which were the subject of timely repurchase demands – i.e., the demand's 90-day cure period must have expired within the six-year statute of limitations period. Second, Judge Castel found that the Trusts could also recover on loans for which it proved UBS' independent discovery of breaches of representations and warranties, even if those loans were not included in any breach notices. The Trust would be required to prove discovery as to individual loans at trial, In addition, Judge Castel ruled that the Trusts could not recover under a theory of "pervasive breach." Judge Castel further held that the Trusts could recover losses incurred on liquidated or foreclosed properties, that evidence of default was not required in order to show a breach of representations and warranties, that summary judgment was inappropriate for determining whether loan files were incomplete at the time of origination, and that the Trusts could not recover rescissory damages. Order.
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