The Brattle Group has been retained as experts and has worked with academic economists in cases involving banks, hedge funds, and other financial institutions including Bank of America, Countrywide, MBIA, and the Federal Deposit Insurance Corporation (FDIC). We work closely with academics including Nobel Laureates Joseph Stiglitz and Daniel McFadden, Gary Gorton, and Dwight Jaffee. Our work has covered the following range of topics:
- Statistical sampling of loan pools and assessment of compliance with prospectus
- Analysis of mortgage underwriting and loan characteristics on loan performance
- Investigation of alleged discrimination in mortgage lending
- Evaluation of put-back liabilities of mortgage-back securities (MBS) issuers
- Analysis of risk management and mortgage accounting practices
- Mark-to-market pricing of thinly traded MBS
- Investigation of potential abuses in trading practice and reporting
The Brattle Group has significant experience in the sampling and analysis of large and complex loan datasets. We have evaluated the characteristics of loans underlying the mortgage pools to understand the extent to which loan pools may have been concentrated in certain geographic areas, among certain types of borrowers, and with specific types of loans. These loan attributes include: the geographic distribution of collateral; seniority (e.g., first or second lien); LTVs or CLTVs; amortization schedule (e.g., fixed rate, ARM, Option ARM); and borrower creditworthiness.
In the case of Syncora Guarantee Inc. v Countrywide Home Loans Inc., The Brattle Group was retained by bond insurer Syncora to calculate the losses accrued as a result of securitized home equity loan defaults issued by Countrywide. Our experts assessed whether the defaults were primarily a result of housing market conditions or of loan defects that went undetected due to a failure by Countrywide to adhere to published mortgage underwriting guidelines. The case settled for $375 million during expert discovery.
The Brattle Group was retained by outside counsel representing the FDIC in litigation against several financial institutions over the issuance of faulty MBS to a bank now acquired by the FDIC. We assessed whether the FDIC or the issuing bank should be liable for the mortgage put-back obligations from the originator, and whether and how the transfer of the originator to the bank by the FDIC was affected by contingent put-back liabilities.
On behalf of defendants in SEC v. Goldstone et al, a Brattle principal submitted an expert report and testified in the jury trial dealing with mortgage-backed securities and security repurchase agreements (repos), including issues related to margin calls. Brattle also discussed actions taken by the Federal Reserve in response to events of the 2007-2008 financial crisis, as well as guidance the Federal Reserve provided on the financial reporting of impaired securities. The jury sided with the Thornburg executives, unanimously returning five counts in their favor and deadlocked on five others.