MURPHY & cGONIGLE

A Professional Corporation

Email: cmatheson a,mmlawus.com

4870 Sadler Road Tel: (804) 762-5332

Glen Alen, Virginia 23060 Fax: (804) 762-5361

August 22, 2014

VIA ECF

Catherine O'Hagan Wolfe Clerk of Court United States Court of Appeals

for the Second Circuit 40 Foley Square New York, NY 10007

Re: Lehman XS Trust, Series 2006-4N, by U.S. Bank National Association v. GreenPoint Mortgage Funding, Inc. No. 14-0399

Dear Ms. Wolfe:

This firm represents Defendant-Appellee GreenPoint Mortgage Funding, Inc.

("GreenPoint") in connection with the above-referenced appeal. On August 15, 2014, the Court

directed the parties to state their positions regarding whether the appeal should be adjourned

pending the decision of the New York Court of Appeals in ACE Securities Corp. v. DB

Structured Prods. Inc., 2014 WL 2891678 (N.Y. June 26, 2014). For the following reasons,

GreenPoint believes it would serve the interests of judicial efficiency to adjourn the instant

appeal until such time as the New York Court of Appeals renders a decision in ACE.

The appeal in this diversity case presents issues governed exclusively by New York law.

The plaintiff has asserted New York state law claims based on alleged breaches of

representations and warranties concerning loans that were deposited into the plaintiff trust and

New York

♦ Virginia ♦ Washington, D. C .

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Catherine O'Hagan Wolfe August 22, 2014 Page 2 of 4

securitized. The central question raised by the case is when the New York Statute of

Limitations began to run on the plaintiff's claims. Specifically, the issue is whether the Statute

commenced on the effective date of the allegedly breached representations and warranties (as the

District Court held) or when GreenPoint allegedly failed to cure or repurchase certain of the

loans several years later (as plaintiff argues).

Notwithstanding certain differences in the language of the contracts at issue in this case

and ACE, the same fundamental issue will be decided in ACE. The District Court in this case

noted the material similarities between this case and ACE:

As in this case, the Trust in ACE Securities could not sue before three conditions were met—discovery, lapse of cure period and demand for repurchase. Nevertheless, the First Department held that "the [breach of contract] claims accrued on the closing date of the [Mortgage Loan Purchase Agreement], when any breach of the representations and warranties contained therein occurred" not when "defendant either failed to timely cure or repurchase a defective mortgage loan."

Lehman XS, 2014 WL 108523, at *3.

Every federal decision to have considered the issue presented here has cited the opinion

of the Appellate Division, First Department in ACE. Every federal decision but one has relied on

ACE to reach the same conclusion reached by the District Court in this case—the cause of action

for breaches of representations and warranties concerning securitized mortgage loans accrues

when the loans are sold rather than when a repurchase demand is refused. Deutsche Bank

National Trust Co., solely as Trustee of the GSR Mortg. Loan Trust 2007-OA] v. Quicken Loans

Inc., No. 13-CV-6482, 2014 WL 3819356, *3-4 (S.D.N.Y. Aug. 4, 2014); Lehman XS Trust,

Series 2006-GP2 v. GreenPoint Mortg. Funding, Inc., No. 12-cv-7935, 2014 WL 1301944, at *3

(S.D.N.Y. Mar. 31, 2014); Wells Fargo Bank, N.A. v. JPMorgan Chase Bank, NA., No. 12-cv-

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Catherine O'Hagan Wolfe August 22, 2014 Page 3 of 4

6168, 2014 WL 1259630, at *3-4 (S.D.N.Y. Mar. 27, 2014); cf. Ace Sec. Corp. Home Equity

Loan Trust, Series 2007-HE3 ex rel. HSBC Bank USA, Nat'l Ass 'n v. DB Structured Prods., Inc.,

No. 13-cv-1869, 2014 WL 1116758, at *6 (S.D.N.Y. Mar. 20, 2014) (not involving Statute of

Limitations; "When a plaintiff alleges that a representation or warranty was false, the relevant

breach is the false representation or warranty, and the plaintiff has a legal right to demand

payment as of the date it was made.").

As in this case, the plaintiff trust in the most recent of these decisions claimed that a

defendant loan originator had breached its "contractual obligation to repurchase mortgage loans

that it sold pursuant to materially false representations and warranties." Deutsche Bank National

Trust, 2014 WL 3819356, *1. The court ruled that the claim was time-barred because it was

filed more than six years after the loans were sold:

[T]here is no persuasive evidence that the New York Court of Appeals would abrogate the rule stated in ACE I and the well-reasoned cases following it in this District. On the contrary, the Court of Appeals recently expressed concern that delaying the running of the period of limitations until a demand is made "would allow [a plaintiff] to extend the statute of limitations indefinitely by simply failing to make a demand." [Hahn Auto. Warehouse, Inc. v. Am. Zurich Ins. Co., 967 N.E.2d 1187] at 1191.

Therefore, the Court holds that the period of limitations in this case began to run when the R & Ws were breached [on the closing and transfer dates].

Id.,*4.

State court decisions have likewise relied on the Appellate Division's decision in ACE in

reaching the same result as the District Court. Fed. Hous. Fin. Agency v. DB Structured Prods.,

Inc., No. 652978/2012, 2014 WL 1384489, at *1-2 (N.Y. Sup. Ct. N.Y. County Mar. 17, 2014);

Nomura Asset Acceptance Corp. Alt. Loan Trust, Series 2006-S2 v. Nomura Credit & Capital,

Inc., No. 651827/2012, 2013 WL 6840128, at *1 (N.Y. Sup. Ct. N.Y. County Dec. 23, 2013); cf

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Catherine O'Hagan Wolfe August 22, 2014 Page 4 of 4

U.S. Bank Nat'l Ass'n v. DLJ Mortg. Capital, Inc., 42 Misc. 3d 1213(A) (N.Y. Sup. Ct. N.Y.

County 2014).

The decision by the Court of Appeals to entertain the ACE appeal indicates that the First

Department's decision implicates issues that are novel or of public importance, or that it conflicts

with other judicial decisions. N.Y.C.R.R. 500.22(b)(4). For this reason, it would be important

that the affirmance by this Court be analytically congruent with that of the Court of Appeals.

Erie R.R. Co. v. Tompkins, 304 U.S. 64, 79-80 (1938); Cantor Fitzgerald Inc. v. Lutnick, 313

F.3d 704, 709 (2d Cir. 2002). By the same token, in the event that the Court of Appeals reverses

ACE, the reasons for that reversal must be carefully analyzed in order to determine the

appropriate disposition of this appeal. Accordingly, adjourning a decision in this case until the

Court of Appeals renders its opinion in ACE is, in GreenPoint's opinion, the prudential course of

action.

Very truly yours,

Cameron S. Matheson

4829-1050-7805, v. 1

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